Crypto firm raises millions for Bitcoin mining: Is the tide turning for CEXs

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  • Cryp­to infra­struc­ture firm Block­stream raised $125 mil­lion in con­vert­ible note and secured loan financing.
  • Ven­ture cap­i­tal firm Kingsway Cap­i­tal led the con­vert­ible note rise, with Ful­gur Ven­tures par­tic­i­pat­ing in the round.

Cryp­to infra­struc­ture firm Block­stream raised $125 mil­lion in con­vert­ible note and secured loan financ­ing, accord­ing to a press release on 24 January.

The com­pa­ny, which raised $210 mil­lion at a val­u­a­tion of $3.2 bil­lion in August 2022, stat­ed that the pro­ceeds would be used to expand its min­ing facil­i­ties in order to meet high demand for large-scale host­ing services.

Ven­ture cap­i­tal firm Kingsway Cap­i­tal led the con­vert­ible note raise, with the Ful­gur Ven­tures par­tic­i­pat­ing in the round. Cohen & Cohen Cap­i­tal Mar­kets, part of J.V.B. Finan­cial Group, advised Blockstream.

Block­stream will be able to expand its min­ing capac­i­ty for insti­tu­tion­al host­ing cus­tomers because of the fund­ing. Com­pared to so-called prop min­ers, this was one seg­ment that remained resilient in the face of Bit­coin price volatility.

Erik Sven­son, Blockstream’s Pres­i­dent and Chief Finan­cial Offi­cer, said:

“We remain focused on reduc­ing risk for insti­tu­tion­al bit­coin min­ers and enabling enter­prise users to build high-val­ue use cases.”

Found­ed in 2014, Block­stream focused on build­ing infra­struc­ture and appli­ca­tions based upon the Bit­coin [BTC] net­work. In addi­tion, the com­pa­ny intend­ed to expand its renew­able ener­gy min­ing prod­ucts while con­tin­u­ing to devel­op its own Bit­coin min­ing machine.

Greener pastures for Bitcoin miners?

A pro­longed cryp­to bear mar­ket, frac­tured by sev­er­al high-pro­file bank­rupt­cies cul­mi­nat­ing in the FTX col­lapse, put sig­nif­i­cant pres­sure on the min­ing community.

Due to declin­ing rev­enues, Bit­coin min­ing behe­moth Core Sci­en­tif­ic declared Chap­ter 11 bank­rupt­cy in Decem­ber last year. Anoth­er min­ing group, Greenidge Gen­er­a­tion, avoid­ed bank­rupt­cy at the same time, thanks to a $74 mil­lion life­line from New York Dig­i­tal Invest­ment Group.

The bad sea­son for Bit­coin min­ers may have passed as hash rate sta­bi­lized and prof­it mar­gins grad­u­al­ly improved toward the end of 2022. The min­ing indus­try, how­ev­er, remained under pres­sure, par­tic­u­lar­ly for small and mid-sized min­ers with breakeven prices above $25,000 BTC.

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