The $500 million fundraising pool for the crypto exchange was first introduced in October. In the midst of a crypto market crisis, this was done in order to lend to struggling mining operations.
Due to energy issues, crypto platforms are switching from PoW to PoS, and the transition has proven to be difficult for the mining industry.
Following the Merge, Ethereum‘s PoW to PoS mechanism changed, and many ETH miners began mining tokens. These included Beam [BEAM], Ravencoin [RVN], and Ethereum Classic [ETC].
Binance joins other crypto firms to launch a lending fund
Binance however wasn’t the only crypto company to recently introduce a lending fund. A $250 million fund was also established in September by Jihan Wu, the billionaire founder of Bitmain, a manufacturer of crypto mining equipment. The funds raised will be used to purchase assets from struggling bitcoin miners.
The gloomy market trend has caused cryptocurrency mining companies all over the world to struggle. Due to growing energy expenses, increasing hash rate difficulty, and declining token prices, the mining business has been beset by a string of bankruptcies.
One of the biggest operators of crypto-mining data centers in the world, Compute North, filed for Chapter 11 bankruptcy protection in September 2022. Around 200 creditors were owed $500 million by the mining company.
According to Core Scientific, a Texas-based mining company, cash may be at a premium by the end of 2022, according to a filing with the SEC made in October. Riot Blockchain Inc., a mining company with headquarters in Colorado, also reported a revenue decline of nearly 17% in Q3 of this year in a recent SEC filing.
According to its most recent SEC filing, Australian mining company Iris Energy also missed a payment on a loan totaling $107.8 million. It then unplugged the equipment that was being used as collateral, reducing some of its mining capability.
The mining sector may see a catastrophe if the cryptocurrency market continues to decline. This is due to the direct correlation between mining output and Bitcoin price.
Is Binance monopolizing the crypto market?
According to The Guardian report, Binance is moving toward creating a monopoly in the crypto market. To gain market share from traders, investors, stakers, users of non-fungible tokens (NFT), and other groups, Changpeng “CZ” Zhao’s company has broadened its products and subsidiaries.
According to CZ, the industry is not benefited from collapsing exchanges, users and institutions losing money, and individuals losing confidence in the young sector. In an interview with TechCrunch, regarding his involvement in FTX’s demise, the executive stated:
“I still do not believe that I have a significant impact. We may have been the straw that broke the camel’s back, in my opinion. It’s not a particularly sturdy straw. There was a lot of preparation leading up to it. It’s possible that I was the final thing to push it.”
Data indicates that the exchange benefits regardless of how CZ feels about FTX and creating a monopoly. The trading venue absorbed a large chunk of the Open Interest and trading volume of its bankrupt competitor.