FTX CEO
FTX billionaire Sam Bankman-Fried is eyeing distressed mining corporations as potential acquisitions subsequent after extending a credit score line to BlockFi.
The CEO of the trade needs to stem the contagion affecting lenders and debtors throughout the present bear market. Some miners, he says, have used mining {hardware} as collateral to borrow cash and therefore might contribute to the credit score contagion.
He famous that FTX is open to alternatives within the mining trade after the agency threw lender BlockFi a lifeline with a $400 million credit score line.
And Bankman-Fried’s different agency, Alameda Research, is offering a credit score facility to crypto dealer Voyager Digital after the corporate introduced that embattled hedge fund Three Arrows Capital had defaulted on a $660 million mortgage.
His mortgage to Voyager Digital has a component of self-interest, since Alameda Research owns 11% of the Canadian firm.
FTX serving to lenders by serving to mining corporations
For now, Bankman-Fried is focusing on mining corporations struggling for sufficient money to repay their loans, which has an opposed impact on lenders’ stability sheets. Mining corporations expanded aggressively all through the prolonged bull market that ended this yr, racking up an enormous debt, whereas the brand new bear market put strain on liquidity, resulting in a squeeze.
While few miners have defaulted, some mining heavyweights have needed to change their maintain technique, promoting bitcoins to spice up their stability sheets.
Loans backed by ASICs, the computer systems utilized in mining, an energy-intensive course of by which a transaction is verified and ordered on the blockchain, have come below strain as ASIC costs have fallen.
It is estimated that $4 billion in loans is backed by ASIC collateral. Canadian miner Bitfarms not too long ago took out a mortgage from New York Digital Investment Group secured in opposition to mining ASICs.
Is SBF crypto’s JPMorgan?
Anthony Scaramucci, who not too long ago appeared on CNBC advising buyers to stay disciplined throughout the present market downturn, went on file as saying that Bankman-Fried’s help of cryptocurrency corporations attracts comparisons with John Pierpont Morgan’s position as a lender of final resort to banks throughout the 1907 banking disaster.
This view was criticized by Bloomberg Opinion columnist Lionel Laurent. He identified that regardless of Bankman-Fried’s clout within the crypto trade, his help to different crypto corporations may be very completely different from how JPMorgan and different regulated Wall Street banks would deal with last-resort lending.
He factors out that information agency Kaiko grades FTX quantity 22 on a listing of crypto exchanges ranked in accordance with danger controls, information high quality, and safety. Should bitcoin fall additional, he argues, FTX wouldn’t be immune.
CNBC revealed final week that FTX might pay round $25 billion for BlockFi, a determine denied by BlockFi CEO Zac Prince, with later revelations pointing to a most promoting value of $240 million.
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