Bitcoin mining is an expensive business. Between hardware upgrades, soaring energy costs, and the constant pressure to stay competitive, miners need significant capital to keep their operations running smoothly. But what happens when they need funding without selling their Bitcoin holdings?
That’s where Bitcoin-backed loans come in. Instead of liquidating assets, miners can use their BTC as collateral to access liquidity, allowing them to scale their operations without missing out on future price gains. This financing method is gaining traction, and for good reason—as of August 2024, the global Bitcoin-backed lending market has projections to reach US$45 billion by 2030.
Bitcoin miners are among the businesses increasingly turning to this type of financing to fuel their growth.
Related Post: Complete Guide to Bitcoin Business Loans
Mining Industry Financing Trends
Bitcoin mining companies are increasingly leveraging alternative financing methods to sustain operations and fund expansions. In Q1 2024 alone, public Bitcoin miners raised $1.8 billion through equity financing, marking the highest amount secured in a quarter over the past three years. This shift highlights a growing preference for non-traditional financing models, including Bitcoin-backed loans, as miners seek to optimise capital efficiency in response to Bitcoin's halving event and increasing energy costs.
How Vield’s Bitcoin Loans Support Miners
Bitcoin-backed loans allow miners to borrow against their Bitcoin while still retaining ownership. This financing model offers several advantages:
- Avoid Selling Bitcoin at the Wrong Time – Selling BTC to fund operations can result in missed profit opportunities if the price increases. A loan allows miners to hold onto their Bitcoin while securing cash flow.
- Upgrade Mining Equipment – New-generation ASIC miners like the Bitmain Antminer S21 (200 TH/s) or Whatsminer M60S require significant upfront investment. Bitcoin-backed loans provide a way to finance these upgrades without tapping into reserves.
- Expand Operations Without Traditional Bank Loans – Many banks remain hesitant to finance crypto-related businesses, making alternative funding solutions like Bitcoin-backed loans crucial.
- Fast and Flexible Financing – Unlike conventional loans, Bitcoin-backed lending comes with faster approvals and no credit checks, as the collateral (Bitcoin) minimises lender risk.
- Potential Tax Benefits – Loan interest payments are tax-deductible, reducing the overall cost of financing and improving cash flow management.
Case Study: How Vield Helped an Australian Bitcoin Miner Expand
The Challenge: Scaling Up Without Selling Bitcoin
An Australian-based Bitcoin mining operation was struggling with outdated equipment. Their current fleet of Antminer S19 Pro machines (110 TH/s) was becoming less efficient, driving up energy costs while reducing mining profitability. With Bitcoin’s next halving event approaching, the miner knew they needed to upgrade to newer, more efficient rigs to remain competitive.
However, selling Bitcoin to fund these upgrades wasn’t an option. The company believed in Bitcoin’s long-term price potential and didn’t want to miss out on future gains. Additionally, traditional banks wouldn’t approve a loan, citing concerns over the volatility of Bitcoin mining revenue.
Our Vield Solution
Looking for alternative financing, the miner approached Vield. By using 10 BTC as collateral, they secured an AUD $520,000 loan with a 40% Loan-to-Value (LTV) ratio. The funds were disbursed within 24 hours, allowing them to purchase:
- 15 x Bitmain Antminer S21 Hydro (335 TH/s) for increased mining efficiency.
- New cooling and ventilation systems to handle the increased power output.
- Additional renewable energy integration to lower operational costs and improve sustainability.
The Outcome: Increased Efficiency and Profitability
With upgraded hardware, the miner saw reduction in energy costs per terahash and an increase in Bitcoin mined per day. By the time Bitcoin’s price surged again, they had already repaid a portion of the loan while keeping their original BTC holdings intact.
Rather than selling their Bitcoin at lower prices, they leveraged it to scale, setting themselves up for higher long-term profitability.
Why More Miners Are Turning to Bitcoin-Backed Loans
The case above isn’t unique. Across Australia and beyond, Bitcoin miners are realizing that they don’t have to sell their BTC to fund expansion or cover operational costs. Bitcoin-backed loans provide a fast, secure, and flexible way to access capital while keeping their crypto portfolio intact.
How Vield Can Help
Vield specialises in crypto-backed lending, helping miners and other Bitcoin-based businesses access liquidity without unnecessary delays. Whether you need to upgrade your mining equipment, scale operations, or cover short-term expenses, our Bitcoin-backed loans offer a smarter way to finance growth.
Looking for a Bitcoin-backed loan to grow your mining business?
Feel free to book a meeting with our team or contact us today.
