Although some users have faced difficulties with making withdrawals, others have had no problem with it. Its previous partnership with Three Arrows Capital and BlockFi seems to worry miners because those firms did not survive after the market crash.
The once-giant mining pool Poolin recently stopped its withdrawals after facing difficulties for a month. Although it is suffering a liquidity crisis on its platform, its CEO Kevin Pan tried to prevent the situation from worsening.
Users have reported difficulties in withdrawing on its official channel, but some could do it without a problem. Pan said the move aims to preserve assets to stabilize liquidity and operations amid the bearish crypto market.
Poolin reported that it has struggled to maintain its balance sheet in the green. It also clarified that it could use the debt to stabilize the situation and solve its liquidity crisis.
Poolin Stops Its Withdrawals to Stabilize Its Liquidity
According to the company, all assets are safe and secure, clarifying it plans to offer an upgrade before allowing the withdrawal. Rumors about new solutions circulated in its Telegram group, which it later confirmed.
Poolin stopped its withdrawals as a measure to stabilize its liquidity levels. However, this may be insufficient if the company has already begun to falter. Poolin used to have 10% of the hash rate, but it now represents only 6.8% of the computing power.
Poolin Decides to Suspend Its Withdrawals
Poolin had previously associated with two now insolvent companies: Three Arrows Capital (3AC) and BlockFi. Miners seem worried because those two firms did not survive after the market crash. BlockFi helped Poolin expand its services for miners while 3AC signed a strategic partnership with it.
Although instability and fall of the crypto market cause concern, it is relevant to consider other factors. The most prominent is the location of the company in China, which banned all cryptocurrency mining in the territory.
The Ban on Cryptocurrency Mining in China
To reduce energy consumption and limit the economic freedom of citizens, the Chinese government banned Bitcoin mining in 2021. That situation led miners to migrate and mining centers to stop operating, which harmed the hash rate of Poolin.
After known mining operations in China closed, various clandestine centers emerged. Although it is harder to connect to the system now, miners have been able to do it. However, the authorities of the Asian country might eventually detect their operations.
Although the ban seems to have affected the Beijing-based company, it has not yet made any reports. The decline in the hash rate of Poolin might signal its imminent fall.
The growing relevance of cryptocurrencies in the economic system has become evident, which mining companies know well. The above are only examples in that sector that have stopped their withdrawals due to a liquidity crisis amid a bearish market.
Meanwhile, BTC is trading at around USD 19,291 and has accumulated a 2.9% gain over the last 24 hours. While its daily trading volume is above USD 29.38 billion, its market capitalization is about USD 369.32 billion, according to CoinGecko.
By Alexander Salazar
