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Blockstream digital asset infrastructure company raised $125 million to fund its Bitcoin mining co-location services (), highlighting the increased demand for its institutional hosting services in the middle of the bear market.
The $125 million raise was financed by convertible note and a secured loan, Blockstream announced on Jan. 24. The equity of Kingsway venture capitalists led the rise in convertible notes, with additional corporate ownership on a large scale. Cohen & cohen capital markets, part of the J.V.B. group, recommended blockstream on the case.
The funding will enable Blockstream to expand mining capacity for institutional hosting customers — a segment the company said was “resilient” in the face of Bitcoin price volatility compared to so-called prop miners. This last segment is "most directly exposed to Bitcoin price volatility and tight margins," blockstream says.
"We remain focused on reducing risks for institutional bitcoin miners and allowing corporate users to build high-value usage cases," said erik svenson, blockstream chairman and CFO.
Related: BlockFi to sell $160M in Bitcoin miner-backed loans: Report
A protracted bear market in crypto, punctuated by several high-profile bankruptcies that culminated in the FTX collapse, placed significant pressure on Bitcoin miners. In December, Bitcoin mining giant Core Scientific filed for 11 bankruptcy due to plunging revenues.
Mining operation Greenridge avoided bankruptcy in December by receiving a $74 million lifeline from New York Digital Investment Group.
As reported by Cointelegraph, Bitcoin miners’ worst days may have passed as hashrate stabilized and profit margins gradually improved toward the end of 2022. However, the industry remains under pressure, particularly for small and medium-sized mining companies that have a break-even rate of return of more than $25,000 BTC.
