Blockstream Secures $125M in Funding to Expand Mining Operations
- Blockstream has raised $125 million “in convertible note and secured loan financing to expand its institutional BTC mining colocation services.”
- Kingsway Capital led the convertible note, with other investors including Fulgur Ventures.
- Cohen & Company Capital Markets, a division of J.V.B. Financial Group, LLC, will be acting as an exclusive financial advisor to the company.
- The new funding round follows a $210 million Series B funding round.
The prevailing crypto winter in the market has slowed the pace of blockchain adoption, and the involvement of institutions in the crypto industry has also dropped significantly due to the collapse of multiple crypto companies, in which many people have lost money. Interestingly, Blockstream, a blockchain technology company led by co-founder Adam Back, has raised $125 million “in convertible note and secured loan financing to expand its institutional bitcoin mining colocation services” in these tough times.
Interestingly, as per a press release from Blockstream, Kingsway Capital led the convertible note, with other investors including Fulgur Ventures. On the other hand, Cohen & Company Capital Markets, a division of J.V.B. Financial Group, LLC, will be acting as an exclusive financial advisor to the company.
“Building on strong year-on-year revenue growth for 2022, Blockstream will use the new capital raised, including its first debt financing, to expand mining facilities in order to meet the strong demand for its institutional hosting services. Demand for Blockstream’s hosting services remains high due to the company’s strong track record and substantial scale, coupled with an industry-wide shortage of available power capacity,” stated Blockstream.
Moreover, this funding round follows a $210 million Series B funding round, which was used to establish “several enterprise-class mining facilities with capacity for institutional hosting customers and to strengthen Blockstream’s vertical integration with the acquisition of Spondoolies to design and manufacture Blockstream’s own ASIC and enterprise miner.”
The $125 million funding will be utilized to expand the mining capacity for institutional hosting customers, a segment which Blockstream believes remains “resilient” in the face of Bitcoin (BTC) being extremely volatile in the recent period as compared to so-called “prop miners,” which are “more directly exposed to Bitcoin price volatility and compressed margins.”
“This fundraise allows us to accelerate the YoY revenue growth we created with our 2021 Series B and continue to build infrastructure for the future Bitcoin economy,” said Blockstream President & CFO, Erik Svenson. “We remain focused on reducing risk for institutional bitcoin miners and enabling enterprise users to build high-value use cases on the most secure, robust, and scalable blockchain in the world – Bitcoin.”
On the other hand, CEO Back noted that the year 2022 witnessed “multiple large-scale centralized party and protocol failures,” which proved to be a learning experience for the crypto space. Back also added that “the fundamental value of blockchains is in reducing the need to trust third parties.” He also recently slammed central bank digital currencies (CBDCs), stating that they are worse than banks and are “systems of control.” Meanwhile, he remains a supporter of Bitcoin, adding that it is “apolitical, bearer, unseizable money.”
The company also joined hands with Poseidon Group to launch Switzerland’s first decentralized security token exchange for Bitcoin called XDEX. Moroever, the new will support digital assets within the Bitcoin ecosystem, allowing peer-to-peer trading, according to a previous report from BitcoinWisdom.
It is crucial to note that while some mining companies like Compute North have filed for bankruptcy, others like CleanSpark continue to expand their operations amid bearish conditions. The miner acquired competitor Mawson Infrastructure Group’s (MIGI) mining facility in Sandersville, Georgia, for a whopping $42.5 million in September last year, as reported by BitcoinWisdom. The acquisition gave CleanSpark an additional 6,468 of the latest-generation mining rigs.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
