Sygnum’s hashrate-backed loan accelerates green crypto mining
Dynamics Group AG / Key word(s): Cryptocurrency / Blockchain/ESG
Zurich, 8 September 2022 – Sygnum announces the launch of its innovative green financing solution for the growing global ecosystem of carbon-neutral crypto miners. They can pledge pre-defined portions of their existing processing power – or hashrate – in return for cash loans provided by Sygnum. Crypto assets mined from the pledged hashrate is then sold by Sygnum to repay the debt.
Mining is the process in which decentralised computer networks contribute processing power to verify blocks of transactions on a Proof-of-Work (PoW) blockchain. The miner who successfully verifies a block receives a block reward in the blockchain’s native token, for example Bitcoin (BTC) on the Bitcoin network.
Critics of Proof-of-Work (PoW) blockchains believe that their inefficient energy use adversely impacts the climate. Bitcoin attracts the bulk of this criticism due to its market share and continually increasing energy footprint. In response, 58 percent[ii] of Bitcoin miners globally have transitioned to renewable energy sources. The speed of this transition is made possible by miners’ ability to rapidly relocate their operations to places with cheaper, more stable and environmentally friendly energy sources. You can read more about this in the Sygnum report “Does crypto have an energy problem?” here.
Crypto miners often do not have access to traditional finance to acquire, run and maintain their energy-intensive mining rigs – costs that can run into the millions annually, even for small operations. To support the industry’s transition to renewable energy sources, Sygnum is providing hashrate-backed loans to finance the capacity expansion of miners who can demonstrate ongoing carbon neutral operations. This new green crypto financing solution aims to support green mining and accelerate the industry’s transition to a carbon-neutral economy.
Sygnum’s Head of Credit and Lending, Francisco Arruda, comments, “Sygnum’s strategy is to provide ESG-friendly financing to green miners and support their efforts to bring innovation and sustainability to the global crypto ecosystem. By pledging a portion of their mining hashrate, carbon-neutral miners can obtain the capital they need to expand their operations, increasing the inflow of green crypto assets into the market.”
Dr. Arne Scheschonk, Managing Partner of CTCAP Group adds, “With Sygnum’s green mining loan, we were able to scale up our specialist Bitcoin mining equipment (ASICs) and infrastructure. The flexible terms and competitive cost of capital boosted our Zero Emission Mining Strategy and our market position.”
Sygnum is the world’s first digital asset bank, and a digital asset specialist with global reach. With Sygnum Bank AG’s Swiss banking licence, as well as Sygnum Pte Ltd’s capital markets services (CMS) licence in Singapore, Sygnum empowers professional and institutional clients or qualified investors (e.g. corporates, banks and other financial institutions) to invest in the digital asset economy with complete trust. Sygnum operates an independently controlled, scalable, and future-proof regulated banking platform. Our interdisciplinary team of banking, investment, and Distributed Ledger Technology (DLT) experts is shaping the development of a trusted digital asset ecosystem. The company is founded on Swiss and Singapore heritage and operates globally. To learn more about Sygnum, please visit www.sygnum.com.
Disclaimer: This document was prepared by Sygnum Bank AG. This document may contain forward looking statements and may be subject to change. The opinions expressed herein are those of Sygnum Bank AG, its affiliates, and partners at the time of writing. The document is for informational purposes only and contains general material. It is for use by the recipient only. It does not constitute any advice or recommendation, an offer or invitation by or on behalf of Sygnum Bank AG to purchase or sell assets or securities. It is not intended to be used as a general guide to investing and should be used for informational purposes only. When making an investment decision, you should either conduct your own research and analysis or seek advice from an expert to make a calculated decision. The information and analyses contained in this document have been compiled from sources believed to be reliable. However, Sygnum Bank AG makes no representation as to its reliability or completeness and disclaims all liability for losses arising from the use of this information.
[i] Petahash per second
[ii] Bitcoin Mining Council Survey Q1 2022
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