Blockstream Mining issues hashrate-backed security token in fundraise

Blockstream Mining is raising funds by issuing a security token—Blockstream Mining Note 2 (BMN2)—backed by the Bitcoin (BTC) miner’s hashrate, according to a Sept. 5 announcement. 

The BMN2 token is designed to “provide direct exposure to Bitcoin hashrate operated by Blockstream’s… enterprise-grade mining facilities across North America,” Blockstream said.

Priced at $31,000 per token, each BMN2 represents a 48-month claim on one petahash per second (PH/s) of Blockstream’s mining hashrate, the company said. Hashrate measures the computing power used to mine blocks on the Bitcoin network.  

In effect, Blockstream is selling four-year claims on the proceeds from its BTC mining operations in exchange for upfront funding. Investors benefit from a significantly discounted hashprice of $21.23, Blockstream said.

Hashprice is a standardized measure of hashrate market value. The spot market hashprice exceeds $40 as of Sept. 5, according to hashrateindex.com.

Bitcoin miners have been looking to shore up balance sheets after the network’s April “halving” cut mining rewards from 6.25 BTC to 3.125 BTC per block. According to JP Morgan, five of the largest BTC miners issued some $1.2 billion in equity during the second quarter of 2024.

It “was a historic quarter, as Bitcoin miners navigated the 4th Bitcoin halving event, which cut the number of daily coins mined (and all else equal, the daily revenue opportunity) in half, resulting in lower margins and profitability across our coverage universe,” according to JP Morgan. 

Related: Bitcoin miner profits drop as halving, power costs weigh — JPMorgan

The company said this is Blockstream’s third time issuing BMN2, which launched in July and raised nearly $7 million in its first issuance. 

In 2021, Blockstream issued a similar token—Blockstream Mining Note 1 (BMN1)—which matured in July. According to Blockstream, it delivered a 32% BTC return over its 3-year term. 

“We created the BMN product to deliver a consistent hashrate with the goal of maintaining a strong and steady investment outcome,” Chris Cook, Blockstream’s chief investment officer, said in a statement.

BMN2 is designed to comply with European Union regulations and is only available to qualified investors outside of the United States. 

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