• Blockstream again secures millions
• Expansion of mining facilities for business customers
• Response to FTX debacle
Blockstream wants to advance the acceptance of Bitcoin & Co
Blockchain company Blockstream, founded in 2014, claims to be the “leading provider of blockchain technologies” and is committed to advancing the acceptance of cryptocurrencies in the financial world. In addition, the company’s developers are significantly involved in the expansion of the Bitcoin blockchain, the Lightning network and other side networks. In addition to offices in Montreal, Canada, Mountain View, USA, and Rechovot, Israel, Blockstream has additional employees who work remotely around the world.
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Millions worth of cash injections in August
In August 2022, it was announced that Blockstream had raised $210 million in a funding round. In the course of the successfully received cash injection, the company was also valued at 3.2 billion US dollars, as reported by “Bitcoin Magazine”. With the help of the fresh capital, they not only want to advance the development of their own mining services, but also build a financial infrastructure based on Bitcoin financial products, according to the medium. According to CoinDesk, Blockstream also wants to start producing Application-Specific Integrated Circuits (ASICs), a special form of crypto graphics cards. The technology and some employees of the Israeli manufacturer of mining hardware Spondoolies were also taken over.
Another round of financing
In January 2023, another cash injection of 125 million US dollars was secured, as Blockstream announced in a press release. With the help of a convertible bond and a secured loan, the blockchain specialist was able to raise the amount of money that will be used to expand the mining business. The convertible bond was led by Kingsway Capital, but Fulgur Ventures also invested in the crypto startup. Blockstream also uses advisory services from Cohen & Company Capital Markets, a division of JVB Financial Group.
Expansion of hosting operations
With this, Blockstream wants to expand its mining facilities to meet the high demand for hosting services. The hosting segment has proven particularly resilient to Bitcoin’s volatility compared to PROP miners, who are rewarded in proportion to all shares submitted in a round. Instead, data centers rent out capacity to crypto miners, which they can use to mine Bitcoin & Co. For miners, this option has the advantage that no large amount of capital has to be invested in setting up a mining infrastructure.
“This capital raise allows us to accelerate the annual revenue growth we created with our Series B in 2021 and continue to build the infrastructure for the Bitcoin economy to come,” Blockstream CFO Erik Svenson said per the announcement. “We remain focused on reducing risk for institutional bitcoin miners and enabling enterprise users to build high-value use cases on the world’s most secure, resilient, and scalable blockchain – bitcoin.”
Lessons learned from FTX crash
After the crypto year 2022 was marked by a number of crises, such as the recent bankruptcy of the crypto exchange FTX, these events underscore the importance of the work that Blockstream is putting into the expansion of blockchain technologies and bitcoin mining, according to the release . “We believe the market learned from 2022, which was marked by multiple large-scale failures of central parties and protocols, that the fundamental value of blockchains is that third parties no longer have to be trusted,” commented Blockstream CEO dr Adam Back the uncertainties in the market.
rating downgraded?
The value of the company was not mentioned in the context of the new round of financing. However, the news agency “Bloomberg” reported in December 2022 that the company was still planning a lower valuation at that time due to the bad mood in the crypto market. People familiar with the matter told the agency the valuation could be under $1 billion — significantly lower than it was in August.
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