Blockstream Raises Funds Despite Bear Market Challenges

The depths of a bear market may not be the best time to pursue capital, but that is exactly what Blockstream is doing, according to a report by Bloomberg on December 7.

Valuation Decline

Blockstream has recently secured fresh funding, but sources indicate that the company is facing a significant reduction in valuation compared to prior rounds. The firm was valued at $3.2 billion during its last Series B funding round when it raised $210 million in August 2021. Today, that valuation is speculated to have fallen nearly 70%, bringing it below the $1 billion mark.

Funding Details and Future Plans

Founded in 2014, Blockstream has raised a cumulative $299 million over four funding rounds, as per CrunchBase data. The CEO and cryptographer Adam Back did not provide specifics about the most recent funding round but confirmed that the capital will be allocated to expanding the firm’s mining capacity.

Back mentioned, “We rapidly sold out all of the capacity and have a big backlog of existing and new customers with miners seeking large-scale hosting with us.” Despite the dip in Bitcoin (BTC) prices and reduced mining profitability, he stated that “hosting rates have risen over the last quarters,” making mining a rapidly expanding high-margin enterprise for Blockstream.

The Current State of Bitcoin Mining

Bitcoin miners are facing a confluence of challenges including high hash rates and mining difficulty, alongside spiraling energy prices and plummeting BTC values. According to Hashrate Index, hash prices have dipped to near-record lows of approximately $0.064 per terahash per second (TH/s) per day, which significantly affects miner profitability.

Blockstream’s Mining Note

In its monthly newsletter on December 5, Blockstream revealed that its Blockstream Mining Note (BMN) token has generated around 5.37 BTC cumulatively in returns, nearly halfway through its three-year hold period. The BMN is a European Union-compliant security token designed to provide non-U.S. qualified investors with exposure to Bitcoin mining, representing 2,000 terahashes of hash rate from Blockstream’s mining facilities.

Innovative Products and Future Outlook

Additionally, the company has introduced a limited edition “Jade Transparent” hardware wallet, emphasizing its commitment to holding Bitcoin for the long term, stating it aims to continue this into the 2090s and beyond.

As Blockstream navigates the challenges of the current crypto market environment, it remains dedicated to expanding its operations and developing products that enhance Bitcoin mining accessibility.