Blockstream, a bitcoin infrastructure company has received $125 million in a new fundraiser to increase its mining operations for large-scale bitcoin miners. The funds were raised in form of convertible notes and secured loans.
The Bitcoin infrastructure firm announced the news, highlighting that Kingsway Capital, Fulgur Ventures, and Cohen & Company Capital Markets were amongst the investors that supported the new capital.
Blockstream stated that institutional bitcoin miners have a high demand for hosting services. As a result, it intends to use the new funds to expand its mining capacity in order to better serve this class of customers.
In addition, Erik Svenson, Blockstream President & CFO stated that the funding will also help accelerate the company’s year-on-year revenue growth. He added that the firm is still committed to helping enterprise users develop high-value use cases on Bitcoin and reduce risks for institutional miners.
It is worth noting that Blockstream had earlier raised $210 million in a Series B fundraiser in 2021. The company said it used the capital to construct mining facilities for its institutional customers and also acquired Spondoolies Ltd, to design and construct its own ASIC mining machines.
The State of the Bitcoin Mining Sector
The state of the bitcoin mining sector is continually evolving, with changes in technology, market conditions, and government regulations affecting the industry. Large mining pools with significant computational power currently dominate the sector.
The competition amongst miners to validate transactions and earn rewards in the form of newly minted bitcoins has led to an increase in the difficulty of mining. This in turn has led to the centralization of mining power amongst a few large players.
However, recently, the Bitcoin mining industry has seen a decentralization trend with the emergence of new mining pools and the use of renewable energy sources. Furthermore, the regulatory environment for bitcoin mining differs by country, with some governments being more open to the industry than others. A host of others have outrightly prohibited the practice.
Amidst these regional differences, miners have also been battling with the dwindling price of Bitcoin over the past year. With price a major determinant of profitability, a number of miners have had to shut their operations across the board. Examples of such mining firms include Core Scientific which announced that it was filing for bankruptcy back in December last year.
In a similar situation, crypto miner, Argo Blockchain stated that its operations may come to an end if a prospective investment deal fails.
Overall, the bitcoin mining industry is complex and dynamic, with a variety of factors influencing its development.
