Highlights:
- Blockstream plans to expand its renewable energy mining products with parallel development of its own bitcoin miner.
- Kingsway Capital led the convertible note, with active participation from Fulgur Ventures and others.
Blockstream Corp. Inc., the Blockchain and bitcoin infrastructure company, recently stated that it has raised USD 125 million in its latest funding. Even when the industry is seriously facing troubles by depressed markets, Blockstream aims to expand its bitcoin hosting and mining services with the raised funds.
According to the recent announcement, the fundraiser was financed through a secured loan and convertible note. Blockstream uses the USD 210 million raised in a Series B funding round from August 2021 to build various extensive mining facilities to host enterprise-class miners. This was followed by recent fundraising where Kingsway Capital led the convertible note, and investors like Fulgur Ventures participated actively with others.
Bitcoin mining is a procedure used to validate and add bitcoin transactions to the blockchain ledger by machines that compete to solve complicated mathematical hash puzzles to verify blocks. When a puzzle is solved, the winner is rewarded with bitcoin, at present 6.5 BTC. On an average, blocks are mined every 10 minutes.
However, as the complication of solving these puzzles rises perpetually, mining equipment can get expensive or may go out of date rapidly. As a result, new equipment needs to be bought regularly. Moreover, this process of bitcoin mining is energy-intensive, so the profit margin largely depends on the current market values of bitcoin. This has been affected due to the bitcoin market nosediving in 2022. There was a fall of 60% between January 2022 and January 2023 of almost USD 17,300.
Presently, the market is recovering, as the recent rise was above USD 22,000 in late January. But, comparatively, recovery is not satisfactory, eyeing its previous high watermark.
Dr. Adam Back, Chief Executive of Blockstream, said, “With 2022 being punctuated by multiple large-scale centralized party and protocol failures, we believe this has been a learning experience for the market: that the fundamental value of blockchains is in reducing the need to trust third parties.”
Core Scientific Inc., a leading bitcoin mining company by hash power, was filed as bankrupt in December due to falling cryptocurrency markets and rising energy prices. This case highlighted the brutality of last year for bitcoin miners. Compute North, a bitcoin mining data center company, filed for bankruptcy at the start of this year, owing USD 500 million in assets to creditors. Compass Mining also stopped its Georgia Operations, citing rising energy prices reason.
Blockstream will focus more on providing hosting services, as it is the strongest industry segment concerning volatility in the cryptocurrency market, per the company. The company is one of the world’s largest bitcoin mining operators, as it presently has more than 500 Megawatts in its development pipeline.
The company intends to expand its renewable energy mining products with the help of this new funding. It will automatically bring down its dependency on expensive energy sources and help to develop its own bitcoin mining machine. It is an institutional-grade bitcoin miner which is purpose-built to scale up.
Chief financial officer and president of Blockstream, Erik Svenson, said, “This fundraise allows us to accelerate the year-over-year revenue growth we created with our 2021 Series B and continue to build infrastructure for the future bitcoin economy. 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.”
