Poolin, a Beijing-based provider of Bitcoin mining-pool services, is issuing tokens to clients equal to the value of various crypto assets that were frozen last week.
(Bloomberg) — Poolin, a Beijing-based provider of Bitcoin mining-pool services, is issuing tokens to clients equal to the value of various crypto assets that were frozen last week.
The firm said earlier that it halted withdrawals to preserve liquidity. Tokens representing six different cryptocurrencies will be issued on a one-to-one ratio, Poolin said in a statement. About $59 million worth of Bitcoin is sitting in Poolin’s digital wallet, according to data from mempool.space. Ether, Litecoin and the stablecoin USDT are among the other tokens being held in the firm wallet.
Bitcoin miners use powerful computers to validate transaction data encrypted by the blockchain and earn rewards in the token. However, they have to compete to be the first to solve the mathematical puzzles to win such rewards. The more computing power a miner has, the more likely the miner will win. Poolin, which was one of the largest mining-pool services providers, aggregates computing power from miners through its software to increase the probability of winning rewards. It charges miners a fee for providing the services. The firm is now the seventh largest mining pool, according to data from btc.com.
Mining pools have become an integral part of the crypto-mining industry as the vast majority of miners, including Riot Blockchain Inc. and Core Scientific Inc, use such services. When mining pools win, they put the rewards in their wallets and the miners can withdraw and cash out on the tokens. Miners tend to take out their shares of rewards in a matter of days but some pools like Poolin incentivize miners to leave their coins in the wallets for a longer time with yield-generating products.
The tokens being issued will be on Ethereum blockchain and can be used to repay loans or purchase new mining rigs. Poolin also mines Bitcoin itself. The total computing power in Pollin’s pool has dropped by about 60% since Sept. 5, when it halted withdrawals.
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