Bitcoin infrastructure firm Blockstream this month announced US$125 million in funding.
Blockstream secured a convertible note and secured loan financing to expand its institutional bitcoin mining services, according to a statement from the Montreal-based fintech.
United Kingdom’s Kingsway Capital led the note, with participation from Fulgur Ventures in the US, which invests in startups focused on Bitcoin and the Lightning Network.
This funding follows Blockstream’s $210 million Series B capital raise in 2021, which was utilized to build enterprise-class mining facilities with capacity for institutional hosting customers.
Building on revenue growth for 2022, Blockstream will use the new capital to “expand mining facilities in order to meet the strong demand for its institutional hosting services.”
“This fundraise allows us to accelerate the [year-over-year] revenue growth we created with our 2021 Series B and continue to build infrastructure for the future Bitcoin economy,” stated President and CFO Erik Svenson. “We remain focused on reducing risk for institutional bitcoin miners and enabling enterprise users to build high-value use cases on the most secure, robust, and scalable blockchain in the world: Bitcoin.”
Hosting has remained a resilient market segment, according to the company, as compared with “prop” miners (and their lenders), who have been more directly exposed to bitcoin price volatility and compressed margins.
“With 2022 being punctuated by multiple large scale centralized party and protocol failures, we believe this has been a learning experience for the market: that the fundamental value of blockchains is in reducing the need to trust third parties”, said Blockstream CEO, Dr. Adam Back. “The resulting refocus on security and decentralization presents an opportunity for market participants to move to Bitcoin-based non-custodial architectures, like the Liquid ecosystem of startups with decentralized market technology.”
Blockstream remains a market leader in “layer-2” technologies like Core Lightning and Liquid. The Liquid Network is a Bitcoin layer-2 network focused on non-custodial trading, secure smart-contracts, and the issuance of digital securities, stablecoins, and other financial products.
“While Bitcoin is an efficient settlement layer, it needs a Layer-2 solution for everyday transactions,” explains Fulgur Ventures. “That is why we support development … toward decentralized finance.”
With 500 Megawatts in its development pipeline, Blockstream is one of the world’s largest bitcoin mining operators.
The company was founded in 2014 and today has “offices and team members distributed around the world.”