Blockstream Mining Issues Hashrate-Backed Token to Raise Funds
Date: 2024-09-06 Author: Oliver Abernathy Categories: BUSINESS
Blockstream Mining is raising funds by issuing a security token, the Blockstream Mining Note 2 (BMN2), backed by the hashrate of its mining hardware, according to a Sept. 5 announcement.
The BMN2 token is designed to “provide direct access to the hashrate operated by Blockstream’s industrial-strength mining facilities in North America,” the company said.
The tokens are priced at $31,000, and each BMN2 represents 48 months of ownership of one petahash second (PH/s) of Blockstream’s hashrate. Hashrate measures the computing power used to mine blocks on the Bitcoin network.
Blockstream is selling four years of rights to the revenue from its BTC mining operations in exchange for upfront funding. Investors benefit from a significantly reduced hashrate price of $21.23, Blockstream said.
The hashrate price is a standardized measure of the market value of computing power. As of September 5, the spot market hashrate price is above $40, according to hashrateindex.com.
Bitcoin miners are looking for ways to shore up their balance sheets after the April halving, which reduced mining rewards from 6.25 BTC to 3.125 BTC per block. The five largest BTC miners issued about $1.2 billion in shares in the second quarter of 2024, according to JP Morgan.
“It was a historic quarter as Bitcoin miners navigated the fourth halving event, which cut the number of coins mined per day (and therefore daily profitability) in half, leading to lower margins and profitability,” according to JP Morgan.
The company said this is the third issuance of BMN2, which began in July and raised nearly $7 million in the first round.
In 2021, Blockstream issued a similar token, the Blockstream Mining Note 1 (BMN1), which closed in July. According to Blockstream, it has returned 32% in Bitcoin over three years.
“We built the BMN product to provide a stable hashrate to support a sustainable investment outcome,” said Chris Cook, Blockstream’s chief investment officer.
BMN2 is designed to comply with European Union regulations and is only available to qualified investors outside the United States.
