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MIAMI, FL – Financial services company Antalpha unveiled several novel lending products for crypto miners at Bitmain's World Digital Mining Summit (WDMS) in Miami on Tuesday.
The products unveiled at WDMS include co-lending with other financiers; financing to offload electricity costs, one of miners' biggest operating expenses; deals collateralized with hashrate instead of tokens or equipment as is common in the industry, as well as financing collateralized by both hashrate and mined tokens; and lending with no margin calls, a type of structured lending. A co-lending deal is currently under discussion, Antalpha's Managing Director of Business Development Max Liao told CoinDesk on the sidelines of the conference.
Crypto miners have been facing margin calls on their loans as the price of bitcoin has dropped in the last few months, while capital has dried up amid a bear market. During Antalpha's presentation on Tuesday, phones flashed across the room as miners and other financiers eagerly took pictures of sample deals shown on the screen, an indication of the interest for a new player in mining finance.
Antalpha is a Bitmain strategic partner, much like cloud mining platform BitFuFu. The firm is based in Singapore, with its 150 or so employees spread acrossHong Kong, the U.S. and Switzerland, according to Liao.
“Our goal is to become a proper financial institution,” Liao said, which is why they have a global presence and prioritize risk management.
They have been focusing particularly on financial services and asset management, as well as equipment financing, he said. They are applying for a Type 9 digital asset license in Hong Kong, Liao said.
“We're not looking to replace any of the big vendors out there,” Liao said. However, Antalpha will step in if other lenders “are not fulfilling their function,” meaning that they are either unable or unwilling to predict or assess the risk associated with mining loans, don't have the capital to give out loans, or are too conservative to invest in the market, he said.
The loans come with interest rates of around 6.6% to 8% per year, and loan-to-value ratios from 60% to 90%, according to Liao's presentation.
The firm has about $700 million of client's assets on its balance sheet and doesn't leverage its internal assets, Liao said. The company believes it is in a good position to evaluate miners' risks due its relationship with Bitmain, the world's largest manufacturer of bitcoin mining rigs, and its mining pool affiliate, AntPool. The mining pool will be collateralizing the hashrate for the hashrate loans, which will come with no margin calls or liquidations, according to Liao's presentation.
Bitcoin financing is one of Antalpha's core businesses, but mining financing “is very important for the overall ecosystem right now because there is a credit crunch happening” and borrowers might not be able to find much-needed cash, Liao said.
Read more: Crypto Miners Face Margin Calls, Defaults as Debt Comes Due in Bear Market