Based in Massachusetts BankProv announced that it would no longer offer loans secured by crypto mining machines.

What happened: In a Tuesday filing with the SEC, the bank’s holding company, provident bankstated that the bank’s digital asset loan portfolio declined 50% in the fourth quarter due to the sale of non-performing loans and the repayment of a line of credit.

BankProv held $41.2 million in digital asset-related loans at the end of December, of which $26.7 million was collateralized by crypto mining machines.

The bank said: “The amount will continue to decrease as the bank no longer makes this type of loan.”

The crypto mining industry was booming in 2021, using mining machines as collateral to secure loans, often using the funds to buy more machines.

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Why it matters: However, this model began to unravel as the cryptocurrency bear market took hold and mining machine prices plummeted by 85% in 2022 Data by Luxor Technologies, analyzed by CoinDesk.

This led to margin calls and collateral seizures as borrowers defaulted on their debts.

Through 2022, BankProv wrote off $47.9 million in net write-downs, mostly from loans secured by mining assets.

The bank also announced that it took back mining equipment in September in exchange for $27.4 million in debt relief to unnamed parties.

As of the end of December, BankProv had net loans totaling $1.42 billion.

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