Binance Provides $500M Loan for Bitcoin Miners

[ObscurePen]

Big ass interest rate... if Binance wanted to really help interest wouldn't be 10%.

[1714603915]

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[1714603915]

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[pooya87]

To be fair, I think Binance already supports the BTC ecosystem more than I expected.

What kind of support has Binance ever given to bitcoin?!!!
An altcoin exchange that is used to list all kinds of shitcoins to be pumped and dumped (including the biggest scamcoin of all times BSV when it had high volume) is harming bitcoin rather than helping it.

Lest we forget that when Binance was hacked they contacted multiple mining pools and offered them payment if they performed a 51% attack on the network to reverse the transaction that was stolen from them. Nobody complied but they still made that offer.

they support BTC by offering 0% trading fees

Last time I checked Binance they still charged a fee for all trades and reduced it if you owned BNB.

[hyudien]

It's a win-win for Binance. Give out a loan to a struggling miner, using their assets as security. Either they pay back the loan and Binance make a profit, or fail to pay the loan and Binance take their assets, which will likely include all their mining gear, meaning Binance get to grow their own operation.

Binance signing a loan contract will only keep him profitable. Meanwhile, the fate of miners who are getting more and more difficult by the day has an additional burden, namely having to pay their loans to Binance along with the interest. I think for Binance this is big business because whenever it is difficult for miners to meet payments the fear is changing hands where miners have to hand over some mining products to Binance, and little by little we will see that miners are being used as alibis to not be able to pay debts they.

[hosseinimr93]

Last time I checked Binance they still charged a fee for all trades and reduced it if you owned BNB.

Below is the announcement they have made about zero trading fee for 13 bitcoin pairs. It does't say anything about holding BNB and that doesn't seem to be required.
Binance Launches Zero-Fee Bitcoin Trading

I stopped using binance after compulsory KYC and will never use it. So, I can't confirm this myself.

[Note3]

I just think that what Binances doing is just to take advantage of the miners who are currently losing money because Binance understands that providing loans at a certain interest rate will be more profitable than running the mining themselves.
Big institutions will always target profit even though publicly stating the reason doesn't mean it's trully the truth

[Aanuoluwatofunmi]

I don't trust the moves from Binance in granting the loans and if miners got to collect such it will rather do more to increase the difficulty in their experience on low income to be unable to afford paying back Binance at the long run, this year we have the ever increasing hash rate from miners and before you know the bear season will eventually pass and bull will come in, miners has to reason that in doing business, you don't expect having the same result repeatedly at all times, striking a deal with Binance for loan is a non profitable business at all, only if miners could realize this.

[Pierre 2]

I don't understand why people think Binance profiting through this is a bad thing. This is how global markets work. They help miners that need help and in return they make some profits to help their businesses. Binance helps elements of crypto markets because they need crypto markets to survive. What would happen to Binance if all crypto died? It wouldn't even exist because there would be nothing to trade.

[Lucius]

Big ass interest rate... if Binance wanted to really help interest wouldn't be 10%.

You noticed that well, and it was also the first thing that caught my eye with this generous offer. Obviously, CZ and his team are no better than those local criminals who lend money to desperate people, with the only difference being that the criminals have some painful debt collection methods. I just wonder what the KYC process will be like for anyone who decides to accept such an offer - maybe a picture of the owner's face next to each mining device with an invoice and serial number

[ABCbits]

Eligible borrowers will be required to agree to our terms & conditions, including but not limited to:

a. an 18 to 24-month term

b. interest rates ranging from 5% to 10%; and

c. offering security, either physical or digital assets, satisfactory to Binance.

While most people question whether this loan would help or hurt miner economically, there's different concern where not all T&C which is mentioned publicly. While i expect something normal such as not mentioning agreed interest rate/payment date publicly, it could be something malicious such as applying blacklist on their pool.

[Z-tight]

I don't understand why people think Binance profiting through this is a bad thing. This is how global markets work. They help miners that need help and in return they make some profits to help their businesses. Binance helps elements of crypto markets because they need crypto markets to survive. What would happen to Binance if all crypto died? It wouldn't even exist because there would be nothing to trade.

All crypto aren't dying, though altcoins can die anyway , but surely bitcoin isn't dying, and as o_e_l_e_o already rightly said in this thread, hash rate is currently at an all time high, so there is no problems in the bitcoin network/protocol. And you are correct binance needs people to trade with many of these shitcoins to survive .

Binance is not helping miners, they are making money off miners with that kind of interest rate and security involved, miners that will take their offer are the ones helping binance to make money .

[o_e_l_e_o]

ps: I'm wondering how pools are going to divide 1 sat to multiple miners during 2136-2140.

The block subsidy might only be 1 sat, but there are still all the fees to consider, which will result in a block reward far higher than a single sat and easily divided between multiple participants.

Every miner, investor has own limit and when we have a majority of miners reach their limits, we likely witness a miner capitulation.

That's not how it works. There will not be a mass capitulation like that. If an individual miner reaches their limit and turns off all their equipment, then by doing so they make mining easier and therefore more profitable for every other miner they leave behind. It's a self correcting process.

[cryptosize]

The block subsidy might only be 1 sat, but there are still all the fees to consider, which will result in a block reward far higher than a single sat and easily divided between multiple participants.

That still doesn't answer my question:

How are you going to divide the block subsidy (not the block reward/fees) among multiple participants?

1 BTC could be worth the equivalent of billions of $$$ by 2136... so 1 sat could matter a lot by then.

[o_e_l_e_o]

How are you going to divide the block subsidy (not the block reward/fees) among multiple participants?

Why would a mining pool only divide the subsidy between all participating miners in their pool and not similarly divide the fees? If the total block reward is 1 sat and 0.5 BTC in fees, then the mining pool will divide the full 0.50000001 BTC between all the miners.

[BlackHatCoiner]

[...]

You don't divide the subsidy. You only divide the reward, which is the subsidy and the fees. The real question is: What will happen if someone wants to move an amount, and pay 1 sat as a fee, given that 1 sat is valuable?

Even though fractional satoshis could likely be implemented in a soft-fork way, it'd be preferable to do it in a hard-fork way. And since ECDLP will be likely broken by 2136, a quantum-resistant algorithm is going to be needed, which will result in an inevitable hard fork. Perhaps we could expand the sub-units along with that.

This problem will be a serious concern only if there's a tremendous rise in production of goods, because otherwise, for a hyperinflated USD with little rise in production, $10 isn't going to be much (which is the equivalent of 1 sat, given that 1 BTC = $1B).

[cryptosize]

What will happen if someone wants to move an amount, and pay 1 sat as a fee, given that 1 sat is valuable?

I assume almost everyone (including miners) will use LN by then, not on-chain transactions (they will be too expensive).

The history of money has taught us that a currency always starts in a pure form and then abstractions get added on top of that.

Whether it's fractional reserve money, electronic fiat money or LN.

LN already adds 3 more decimals, so...

If BTC becomes so popular, 7 txs per second means it will be very rare in a world of billions of people to do on-chain transactions on a frequent basis.

I think BTC was designed for the average connection of 2009, which is a regular ADSL @ 1 Mbps (upload). By 2136 almost everyone will have FTTH, so block size could be increased with no repercussions.

There's even a parabolic hyperbitcoinization chart which shows that 1 BTC could even reach trillions of dollars each. So 1 sat could be worth 10k USD or even more.

By 2136 we may have colonized the galaxy if Elon's vision becomes a reality, which means that even gold could become abundant, let alone food/energy:

https://theprint.in/opinion/giant-asteroid-has-gold-worth-700-quintillion-but-it-wont-make-us-richer/260482/

"the minerals contained in asteroid 16 Psyche are said to be worth $700 quintillion — enough to give everyone on the planet $93 billion"

Gold hyperinflation is possible, but we will need better mining technology. BTC is capped at 21 million, but you can always introduce more subdivisions (on-chain or off-chain).

[cryptosize]

One more thing (huge plot twist):

By 2136 the whole BTC development/deployment could be entirely handled by... robots and AI.

If this sounds sci-fi crazy to you, take a look at what happened last month:

https://www.ndtv.com/world-news/tang-yu-an-ai-powered-robot-named-ceo-of-a-chinese-company-3326427

[seoincorporation]

And why doesn't Binance use those $500M to mount their own mining farm?

Is a tricky situation, because if they give it as a loan they will win for sure and recover their investment, but if they create their own farm and cryptos price dumps after that then they will be in a huge loss and huge problems, i think that's why they don't want to take the risk.

[BlackHatCoiner]

If BTC becomes so popular, 7 txs per second means it will be very rare in a world of billions of people to do on-chain transactions on a frequent basis.

Funnily enough, we'll replace the traditional banking system. And we'll do it with 7 transactions per second. 

I think BTC was designed for the average connection of 2009, which is a regular ADSL @ 1 Mbps (upload).

It doesn't matter, but I don't think it was. Satoshi had set the block size at 32 MB at first.

By 2136 almost everyone will have FTTH, so block size could be increased with no repercussions.

There's already greater internet speed, but no such change. Perhaps it's just not worth the consensus inconvenience.

[bitgolden]

here is the thing many people get wrong about loans..

loans are not suppose to be for people that dont have any assets/ income.. having nothing and then owing someone in the future is the death spiral of fiat.

smart people and rich people know this
those with funds and can afford things without a loan, take out loans as a positive. that way they are not having to spend their own wealth upfront. but use the loan to create more income to increase their wealth

The exact method is used by apple for example, literally the same thing you are talking about. What is it? They had billions of dollars in cash, and they still took out a huge loan to build their headquarters, why did that they do that when they had enough money to buy and build it? Because of 2 things, first of all it's someone else’s money, why not get it right away and pay in small instalments, making your cash flow a lot more free to do whatever else you want.

And secondly debt is tax free, which means you could show the IRS that you are in debt, and they can't tax you for that much amount, giving you bigger tax cut thanks to it than the interest rate you are going to pay back. That’s just smart business.

[franky1]

yes the debt liability offsetting income is a tax bonus too

..
but the main aim is as said in first part in both our posts. it free's up having to use your own funds. where by if you use a loan to increase your general income then it negates any interest

EG imagine having to sell bitcoin today at 100btc for $1.955m
to then buy 170 asics at $11.5k

then later the bitcoin price jumps to just $22k
guess what.. thats yout 10% extra lost

however take out a loan. keep 100btc on lock as collateral
use their $1.995m to buy 170 asics

and in 18months.  when its time to call in the loan
you have mined more coins with the extra asics.. so win their.. and also the natural price of bitcoin has gone way more then $22k. meaning you dont have to give them all of your initial 100btc to them. you pay them less than 100btc. thus win again

.
interest rates are a bad thing when it comes to fiat. due to the inflationary system of fiat where 10% interest per year is more like 14% because inflation devalues money by 4% ontop. thus your paying 14% extra in a fiat world

however bitcoin is deflationary and in 18 months the payback means you pay them les BTC than what you would have to spend today even if they add on some interest.


the bit i laugh at is how other responders are crying about a 5-10% loan. when fiat credit cards are at upto 40% apr

and also bitcoin sees 5-10% value changes every couple months. so the market will offset the interest