Provident wasn’t very provident.
“Crypto” is a very risky investment. They should have know that.
From the story it sounds like this bank didn’t “invest” in crypto so much as loan money to crypto miners using the crypto mining rigs (high end specialized hardware) as the collateral. Some of the loans were foreclosed/forgiven with the collateral (the mining rig hardware) taken in possession by the bank. Now that many/most of the crypto currencies have collapsed 50-80% from their highs that collateral that was taken back is not worth quite as much as it once was.
Kind of like a bank loaning money to wildcat oil drillers and then seizing the oil drilling rigs when the drillers were unable to pay back their loans. When the price of oil collapses the value of a rig drops as many unused rigs flood the market (supply goes up) and the value of how much a rig can earn goes down with the price of what they produce.
The question for this bank at this point is will these crypto currencies ever recover in price to where the drilling rigs go back up in value? And unlike an oil drilling rig the value of the crypto rigs tend to depreciate over time because newer, better hardware is always getting cheaper.
This wasn’t about buying and holding crypto. It was about lending money to Bitcoin miners.
Bitcoin mining is very electricity intensive. If you don’t have cheap energy, it quickly becomes a losing proposition. Most major miners are in places where they can tap either a lot of solar power or hydroelectric. To be profitable, you would be somewhere next to a hydro facility and run off hours to consume the cheapest power.
There aren’t a lot of those places in New England.