On Monday, January 17, Blockstream announced the launch of tranche eight of their Blockstream Mining Note (BMN), available through Bitfinex Securities Ltd. According to the Blockstream website, the “BMN provides qualified investors with access to Bitcoin hashrate at our enterprise-grade facilities.”
Typically, bitcoin mining involves high energy costs, and relatively high-risk investments in costly facilities and specialized hardware. The BMN aims to lower these barriers to entry by providing investors exposure to bitcoin mining via the purchase of a security token. Each token has an associated hashrate and can also be traded in the secondary market on the Liquid Network, a sidechain-based settlement network for traders and exchanges. Thus, in addition to exposure to bitcoin mining, the BMN comes with the added liquidity of a tradable security token.
The current offering includes 25 tokens, each of which equates to 2,000 TH/s of hashrate and costs €350,000 ($396,500). Blockstream will purchase bitcoin in the market equivalent to the amount mined to date in order to maintain fungibility with earlier issuances. That means that slightly over 2.67 BTC will be added to each note. The new tranche will be available to accredited investors on the Bitfinex Securities platform until the offering period ends on January 31, 2022, or the tokens sell out. According to the Bitfinex Securities announcement, accredited investors include high net worth individuals who invest a minimum sum of $100,000, authorized persons, and corporate members.
After purchasing a BMN token, bitcoin is mined using that token’s associated hashrate, secured in cold storage, and delivered to the investor at the maturity of a three year term. According to the offering details described on Bitfinex Securities website, a three year term was chosen because “three years is the estimated useful lifespan of an ASIC miner” and “mine-and-hold has historically performed better than a mine-and-sell strategy over all three-year periods.” The BMN are issued and managed using Blockstream’s Asset Management Platform and can be held on a whitelisted address with a wallet such as Blockstream Green. Also according to the offering details, “the BTC mined by the BMN will only be transferred to the final token holders at the end of the BMN’s three-year term. BMN investors cannot claim BTC at any point before this time.” The valuation of the tokens takes into account any proportion of BTC mined up to the time of sale.
In addition to providing exposure to bitcoin via Blockstream’s “enterprise-grade” mining operation (with facilities located in Georgia, USA and Quebec, Canada), the tokens are transferable between qualified investors in denominations down to 0.00001 BMN. According to Blockstream, this means “investors can adjust their exposure to Bitcoin mining based on market conditions by trading the BMN tokens on the secondary market.”
The latest tranche will bring the total investment in BMN to almost €42.15 million ($49 million).