To expand its institutional Bitcoin mining colocation services, leading Bitcoin infrastructure company Blockstream has announced that it raised $125 million in convertible note and secured loan financing.
The convertible note was led by Kingsway Capital, Fulgur Ventures, and other investors. The sole financial advisor to Blockstream is Cohen & Company Capital Markets, a division of J.V.B. Financial Group, LLC.
This recent funding round closely follows Blockstream’s $210 million Series B capital raise from August 2021, which was used for funding the construction of several enterprise-class mining facilities with capacity for institutional hosting customers.
The funding was also used for strengthening Blockstream’s vertical integration through the acquisition of Spondoolies for the development of its own ASIC and enterprise miner.
Blockstream will use the newly acquired funds, including its first debt financing, to expand mining facilities in order to fulfill high demand for its institutional hosting services.
As one of the largest Bitcoin mining companies in the world, Blockstream has over 500 Megawatts of capacity in its development pipeline. Blockstream will also increase the availability of its mining solutions for renewable energy sources and continue developing its own Bitcoin miner, which is the first institutional-grade Bitcoin miner purpose-built to scale.
Blockstream President and CFO Erik Svenson stated that with this latest raise, the company is able to increase year over year revenue and continue to build Bitcoin infrastructure.
Blockstream CEO Adam Back told BTC Times that “Blockstream had a strong 2022 with 3x revenue growth from 2021, and strong demand for hosting into 2023 to expand for, with a return to a bullish market, with Bitcoin up 40% in the first 3 weeks of 2023 alone.”
Back commented that it has been a learning experience for many after multiple companies and centralized protocols failed over the last year.
The resulting refocus on security and decentralization presents an opportunity for market participants to move to Bitcoin-based non-custodial architectures, like the Liquid ecosystem of startups with decentralized market technology. Liquid’s simple contracts enable self-custody for active traders via offline limit orders, non-custodial options, collateralized loans, all from the security of the traders' own hardware wallet protected by their own keys. This technology is compatible both with decentralized and centralized order-book exchanges.