Despite the cryptocurrency market’s current troubles, bitcoin infrastructure firm Blockstream has raised $125m in a convertible note and secured loan financing.
It raised the funds to expand its institutional bitcoin mining colocation services. It claims demand for its hosting services remains high due to the company’s strong track record and substantial scale.
It also plans to expand its renewable energy mining products and continue the development of its own bitcoin miner.
Kingsway Capital led the convertible note, with participation coming from Fulgur Ventures, and others.
Blockstream stated that hosting is a resilient market segment, compared to ‘prop’ miners who have more exposure to bitcoin price volatility and compressed margins.
Dr. Adam Back CEO Blockstream said, “With 2022 being punctuated by multiple large scale centralised 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.
“The resulting refocus on security and decentralisation presents an opportunity for market participants to move to Bitcoin-based non-custodial architectures, like the Liquid ecosystem of startups with decentralised market technology. Liquid’s simple contracts enable self-custody for active traders via offline limit orders, non-custodial options, collateralised loans, all from the security of the traders’ own hardware wallet protected by their own keys. This technology is compatible both with decentralised and centralised order-book exchanges.”
Cohen & Company Capital Markets, which is a division of J.V.B. Financial Group, is providing financial advice to Blockstream for the deal.
This funding follows Blockstream’s Series B round, which closed on $210m in August 2021. The investment, which was led by Baillie Gifford and iFinex, valued the bitcoin infrastructure firm at $3.2bn.
It leveraged this capital to build several enterprise-class mining facilities with capacity for institutional hosting customers. Funds were also put towards the acquisition of Spondoolies to design and manufacture Blockstream’s own ASIC and enterprise miner.
The cryptocurrency market is still feeling the effects of FTX’s crash. Last week, cryptocurrency brokerage Genesis filed for bankruptcy protection.
This move is part of strategic actions to achieve global resolution to maximise value for all clients and stakeholders.
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