Blockchain infrastructure firm Blockstream Corporation Inc. on Tuesday said it raised US$125 million from convertible note and secured loan financing to expand its Bitcoin mining operations and meet strong demand for what it called “institutional hosting services.” Kingsway Capital led the convertible note, a form of short-term debt that can convert to equity, joined by other investors including Fulgar Ventures.

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Fast facts

  • Blockstream completed a US$210 million Series B fundraiser in August 2021 that was used to build several mining facilities, and the latest fundraise will help the company “continue to build infrastructure for the future Bitcoin economy,” said Blockstream president and chief financial officer, Erik Svenson, in a statement
  • The company said providing hosting services for miners has remained a resilient market segment, less directly exposed to bitcoin price volatility and narrower profit margins. Blockstream also said it will expand its renewable energy mining products, and continue developing its own bitcoin miner.
  • Bitcoin mining is a process where miners compete to validate transactions on the blockchain by solving complex cryptographic equations and to be compensated with Bitcoin.
  • Profit margins at miners have been compressed by the 65% drop in Bitcoin prices from the record high of US$68,789 in November 2021.
  • These pressures were compounded last week when the Bitcoin mining difficulty rate, which determines how much computing power is required to verify blocks on the blockchain, reached an all-time high of 37.59 trillion. This spike was due to many U.S.-based miners coming back online after a severe winter storm disrupted power supply and forced many to suspend operations.
  • Core Scientific, one of the largest publicly traded crypto mining firms in the U.S., filed for Chapter 11 bankruptcy in the state of Texas in late December as it was unable to repay debt financing for equipment leasing.
  • Bitcoin prices have rebounded more than 35% since the start of the year and traded at US$22,648 at 1:30 p.m. on Wednesday in Hong Kong. 

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