Binance has announced a new $500 million lending facility to support struggling public and private bitcoin miners.
The development comes at a very tense time within the crypto ecosystem due to the fallout from FTX, the decline in altcoin currencies, and mining being more challenging than ever.
Binance also recognized the toll the crypto winter was taking on miners due to the downturn in the crypto market and the planned transition of ethereum to proof-of-stake (PoS).
Speaking to Binance, one of the world’s largest crypto exchanges, about the loan, they explained, “as one of the top mining pools in the world, Binance Pool will not only operate as a mining pool but also will take responsibility for contributing to building a healthy industry, especially during uncertain market conditions,” the company said.
“That’s why we provide an interest rate ranging from 5% to 10% with a loan term between 18 to 24 months, which is low compared to other industry players. So far, we have received hundreds of applications from multiple countries and are looking for more cloud mining vendors to work with us.”
Supporting mining
Binance isn’t the only firm that is looking to support the struggling crypto-mining industry.
- Bitmain founder Jihan Wu is setting up a $250 million fund to buy distressed assets from mining companies.
- As a working capital provider, Maple Finance has established a lending pool with a 20% interest rate.
- The crypto asset management firm Grayscale has also created a vehicle for investors to take advantage of bitcoin mining infrastructure’s low prices.
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Industry recovery funds
Binance has also announced the formation of an industry recovery fund as part of its commitment to the crypto ecosystem in the wake of the collapse of FTX and its sister company Alameda Research, demonstrating its commitment to the crypto ecosystem and the collapse of FTX and Alameda Research.
They also welcome other industry players that want to co-invest, staying the importance of the ecosystem as crypto is not going away and instead needs to be rebuilt. More details to be announced in the coming days.
Long term
Speaking to Timo Lehes, Co-founder at Swarm Markets, a DeFi, about the support.
He states, “Binance is providing the kind of facility typically offered by Governments or central banks, but the terms of it might be described as somewhat tougher, with interest rates on these loans ranging from 5-10%.”
“But unless you’re operating on ethereum, which is about to see its one-month Merge anniversary, mining is still an important aspect of the crypto ecosphere. But the market does continue to build despite the bearish conditions. In this context, offering liquidity to miners might prove to be an extremely savvy decision for Binance in the long run.”