Blockstream Plans Second Fundraise for Bitcoin Mining Hardware Purchases
Summary:
Blockstream, the Bitcoin infrastructure solutions provider, aims to raise more funds through its second series of Blockstream ASIC (BASIC) Note offering, planning to stock and sell ASICs based on the expected two-year miners' demand. The company's CEO, Adam Back, sheds light on its operation strategy and the influence of Bitcoin prices on the sale of mining hardware. Continuing to react to market conditions and investor demand, Blockstream plans to launch BASIC Note Series 2 at the start of the new year, managed by Luxembourg's security tokens platform, STOKR.
In a bid to procure more Bitcoin mining equipment, Blockstream intends to raise fresh capital via its second series of Blockstream ASIC (BASIC) Note offering. The plan is to gather and distribute ASICs based on the expected surge in demand for miners in the coming couple of years. Sharing insights with Cointelegraph, Blockstream CEO Adam Back emphasized the abundance of Bitcoin mining hardware in the secondary market as an essential catalyst for their second investment offering series.
The company has already completed a $5 million fundraise in Series 1, purchasing unused, off-the-shelf Antminer S19k Pro ASIC miners for $4.87 million. They acquired this sought-after hardware from the Chinese manufacturer through SunnySide Digital. Back highlights that due to the rise in Bitcoin price and the drop in miner price, the opportunity for investment presents itself.
Back remarks that ASIC prices have dipped 2.6 times in dollar value since January 2023, and 6.6 times in Bitcoin. He indicates that Blockstream will store the procured hardware and sell them as the demand for mining hardware grows due to increased mining profitability and the rising Bitcoin value. He emphasized that the firm is more concerned with getting the highest Bitcoin price for the miner over the highest dollar price.
Timing the miner sales is another major consideration, as the drop in available miners in the second-hand market could drive customers directly to the manufacturers, causing the price per terahash of units to surge. Even though it was unplanned, the company ended up selling surplus miners at 3-4 times the purchase price, which Back refers to as being "accidental beneficiaries" of the BASIC Note's guiding strategy.
He further explains that the price of Bitcoin plays a crucial role in trading Bitcoin mining hardware, as miners usually purchase hardware for a fixed dollar amount and calculate the amount of Bitcoin they can mine henceforth. In such scenarios, delivery time from the manufacturer should be factored in, as the investment starts generating value only once the hardware arrives and becomes operational.
During previous Bitcoin bull runs, the increase in Bitcoin value massively reduced the percentage of electrical costs for mining, thereby potentially tripling the profits. Back recalls how investors were willing to pay between $100 to $130 per terahash, up from $30 to $40. This creates a "tail end" opportunity to sell Bitcoin mining hardware procured by Blockstream.
Heading forward, Blockstream's BASIC Note series 2 offering will likely be reactive to market conditions and investors' demand. Luxembourg's STOKR will manage the second series, with plans to go live around the start of the new year. The opportunity is open for accredited non-US investors willing to make a minimum investment of $115,000, payable in Bitcoin (BTC), Liquid Bitcoin (L-BTC), or Tether (USDT).
Published At
12/14/2023 5:01:17 PM
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