Blockstream Inc., a major Bitcoin and blockchain network business, has successfully funded $125 million by selling a convertible note and financing a secured loan.
According to the release (1), Blockstream plans to utilize the funds to extend its current institutional Bitcoin mining colocation services. Kingsway Capital & Fulgur Ventures were the ones who took the lead in the recently finished financing.
This comes after the company completed a Series B investment round of $210 million the year before, which was used to grow its corporate Bitcoin mining activities.
In addition, the business used some of the money it received as part of the series B fundraising to purchase Spondoolies to develop and construct its enterprise miner and ASIC.
Blockstream Planning to Expand Bitcoin Mining
Blockstream plans to follow up where Series B capital left off in the Bitcoin mining facilities it manages with the help of the $125 million received through debt financing. In addition, Blockstream has seen a significant increase in the demand for its institutional hosting services.
Blockstream is planning to expand its Bitcoin mining facility to accommodate institutional investors, and this expansion would need more than 500 Megawatts of power.
"This raises money enables us to speed up the YoY growth in revenue we generated with our 2021 Series B as well as keep building facilities for the subsequent Bitcoin market," said Erik Svenson, President & CFO of Blockstream.
"We remain focused on decreasing risk for organizational Bitcoin miners and helping corporate users to create high-value use propositions on the most secure, resilient, and extensible blockchain in the world — Bitcoin," said the company.
Blockstream has successfully secured major financial backing when institutional failures, such as the implosion of both FTX and Alameda plague the Bitcoin market. Because of this, the firm is confident it will do better in revenue returns when Bitcoin prices begin to rebound from the bear market that began in 2022.
According to the chief executive officer of Blockstream, Dr. Adam Back, "with 2022 being interrupted by many large-scale centralized parties & protocol failures, we feel this has been a learning lesson for the market: that the core benefit of blockchains lies in lowering the need to trust third parties."
What to Expect in Crypto Space?
The crypto market crashed in 2022, sending Bitcoin's price from $69 thousand to $15 thousand in a little over a year, significantly impacting Bitcoin mining operations.
On the other hand, Blockstream reported a significant revenue increase year-on-year (YoY) due to high demand from institutional customers for mining hosting providers.
Despite this, it is possible that the crypto currency market is not necessarily out of deep waters yet because miners & short-term holders are exerting additional sell pressure.
For example, in December 2017, Bitcoin mining startup Greenridge escaped insolvency after New York Digital Investment Group provided them with around $74 million in funding in the last minutes of its fundraising effort.
Blockstream is a company that began operations in 2014 and has since produced a wide variety of products altering the landscape of institutional investors' acceptance of bitcoin. For digital asset issuance, Blockstream provides a liquid network in addition to a Bitcoin layer-2 network.