The CEO of BlockFi said the crypto lending platform is extending credit to miners at a time when competition for their business has eased because of the coronavirus crisis.
“We’re starting to establish relationships with miners for the first time now,” Zac Prince said. The reason: The market has lost some of its risk appetite, he said.
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Previously, BlockFi couldn’t win miners’ business began the company’s competitors were willing to take bigger risks than BlockFi was comfortable with, Prince said. “Two months ago, lots of lenders were accepting miner equipment as collateral, and this isn’t happening anymore. Now, the risk tolerance on the market [has] declined.”
Like other lenders in this market, BlockFi makes fiat loans collateralized by cryptocurrencies, and vice versa.
Two other crypto lenders, Celsius and Nexo, said they did not accept specialized mining computers, known as ASICs, as collateral, but they are still lending to miners. A third, Genesis Capital, did not respond to a request for comment by press time, but CEO Michael Moro said on a recent podcast it has suspended lending overall.
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Taking mining machines as collateral is very risky indeed, said Nexo’s managing partner Antoni Trenchev. “It is rapidly diminishing in value and has to be stored somewhere, so I don’t think it makes a whole lot of sense.”
Overall, despite the ebbs and flows of the crypto market, BlockFi’s business has been doing well this spring, Prince said. According to him, BlockFi saw its monthly revenue “more than double” since February, although he wouldn’t disclose the numbers.
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