Maestro launches Bitcoin credit market for institutional BTC mining yield

Bitcoin infrastructure provider Maestro launched a Bitcoin denominated credit market, which is backed up by mining economics. The aim of the new initiative was to provide institutions with a way to generate yield from idle Bitcoins while increasing financing options for miner.

Maestro announced that Mezzamine has launched its first program, in partnership with the mining-as a service provider Sazmining. The program, according to an announcement made to Cointelegraph on Tuesday, is intended to allow institutional Bitcoin (BTCHolders can use BTC to invest in credit facilities backed by mining, with an aim of earning 8%-9% per year.

It is designed to bring together miners who are looking to raise capital and institutional Bitcoin holders that want to earn BTC. The result will be an onchain market of credit tied to the mining expansion, rather than to protocol staking reward.

“New Bitcoins are mined every 10 minutes, and with Mezzamine BTC holders can earn and share block rewards with miners,” Marvin Bertin is the CEO and co-founder of Maestro.

Related: Top Bitcoin mining stocks rise as US winter storms cut hashrate

Credit market for Bitcoins aims to fill the gap in miner financing

Bitcoin mining companies are often limited in their financing options. They rely on debts denominated in dollars against Bitcoin or equity issues if they’re publicly listed.

This structure, where liabilities and revenue are both denominated by dollars but the miner’s liability is in Bitcoin can make operations vulnerable to sharp downturns in markets.

Maestro has said that its credit facility contains bear-market-protection features. These include hedging based on Bitcoin prices, mining-fleet economy, and other factors to help stabilize the performance of the company during times of downturn.

In exchange for greater stability in downturns, the company stated that miners could face higher costs of financing in markets with stronger economies.

This offering is for institutional investors such as corporate treasuries and asset managers. It’s also open to family offices, registered investment advisors, and even private clients. Sureshrajan, Mezzamine’s managing director told Cointelegraph that the minimum Bitcoin allocation was $100,000.

Mezzamine claimed that mining yields are directly derived from production. Mines borrowing capital through the platform buy ASIC hardware to expand their hashrate. A part of this block reward is then used to repay the credit facility, and the remaining goes directly to the borrower.

Maestro claims that institutions get a yield entirely funded by mining production, with no additional incentives, tokens, or leveraged strategies.

Related: Solo Bitcoin miner bags over $200K block reward using rented hashrate

Bitcoin-denominated loans reduce miner liquidation risks

Bitcoin miners looking for traditional funding are required to often overcollateralize twice, thereby increasing the liquidation risk during Bitcoin price declines. 

Rajan, Mezzamine’s managing director told Cointelegraph that the new credit facility lowers this risk because it denominates loans in Bitcoin, and removes call risks based on dollars.

“A decline in Bitcoin’s price against the dollar does not trigger a margin call, and with Mezzamine’s hedged vehicle, the hedge actually returns profits in bear markets that can supplement mining revenue and further capitalize the program.”

“The loan performs according to mining economics, not currency markets,” He also added.

Maestro has told Cointelegraph that it is seeing more than 1,500 BTC of borrowing requests from mining operators who are exploring other financing options, such as public mines and mid-size operators.

Sazmining is a Bitcoin-mining-as a service provider that relies on hydropower, and carbon-free sources of energy.

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