Blockstream Mining has introduced a new security token, Blockstream Mining Note 2 (BMN2), to raise funds by capitalizing on the company’s Bitcoin mining operations. Announced on September 5, this innovative financial product aims to give investors direct exposure to Bitcoin’s mining power, with each token representing a stake in the miner’s hashrate.
The BMN2 token, priced at $31,000 each, is backed by one petahash per second (PH/s) of Blockstream’s mining hashrate over a period of 48 months. Hashrate, the measure of computing power dedicated to mining Bitcoin, is a critical factor in the network’s security and operational efficiency. This funding approach allows Blockstream to obtain upfront capital by offering future claims on mining proceeds.
Hashrate Valuation and Market Context
Investors purchasing BMN2 benefit from a significantly reduced hashprice of $21.23. For context, the hashprice, which standardizes the market value of hashrate, was recorded above $40 on the spot market as per Hashrate Index on September 5. This strategic pricing provides an attractive entry point for investors looking to capitalize on the mining sector’s dynamics.
The Bitcoin mining industry has faced financial pressures following the network’s halving event in April, which reduced mining rewards from 6.25 BTC to 3.125 BTC per block. In response, leading Bitcoin miners issued approximately $1.2 billion in equity during the second quarter of 2024, according to JP Morgan. This significant market shift has necessitated innovative financial strategies to sustain operations and profitability.
Blockstream’s BMN2 is the third iteration of its mining note product. The first issuance in July raised nearly $7 million, demonstrating substantial investor interest. A similar token, the Blockstream Mining Note 1 (BMN1), matured in July after a three-year term, delivering a 32% BTC return to its holders. “We created the BMN product to deliver a consistent hashrate with the goal of maintaining a strong and steady investment outcome,” said Chris Cook, Blockstream’s Chief Investment Officer.
Designed to comply with European Union regulations, BMN2 is available exclusively to qualified investors outside the United States. This compliance ensures adherence to stringent financial standards and opens the investment opportunity to a global audience while navigating the regulatory landscape effectively.
| Token Name | Launch Date | Price per Token | Backing (PH/s) | Term | Initial Raise |
|---|---|---|---|---|---|
| BMN1 | 2021 | Not specified | Not specified | 3 years | Not specified |
| BMN2 | 2024 | $31,000 | 1 PH/s | 48 months | $7 million |
Blockstream Mining’s issuance of the BMN2 security token represents a strategic maneuver within the crypto financial sector, reflecting a deeper integration of traditional investment mechanisms with cryptocurrency assets. This approach not only provides investors with a novel avenue for engaging with the crypto mining industry but also showcases the evolving methods companies are adopting to navigate economic challenges within the blockchain space.
As the crypto mining industry continues to evolve, such financial innovations are likely to become more prevalent, offering both challenges and opportunities to investors and operators alike.
Featured image credit: wasan prunglampoo via Vecteezy
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