Blockstream opens new funding round for second Bitcoin mining security token

Today, Blockstream opens Series 3 round for its second mining note – BMN2.

The note will be available to eligible investors outside the US and has been revised from Series 1 and Series 2 rounds, which took place on July 18. This round of BMN2 is priced at $31,000 per second (PH/s) or one hash. price of $21.23. Investors who purchased BMN2 in rounds 1 and 2, during which the note sold at a higher price, will be awarded additional BMN2 to make up the difference in price between the first two rounds and the third.

The issuance of BMN2 follows the success of the first Blockstream Mining Note, BMN1, which offered a 32% return over BTC.

Details about BMN2

BMN2 will be a hashrate-backed security token offering (STO) issued on Blockstream’s Liquid Network by Luxembourg-based virtual asset service provider (VASP) Stokr. The note offers 1 PH/s at Blockstream’s North American mining operations for four years.

“Hashrate contracts are typically 30 days to six months,” James Macedonio, Blockstream’s Senior Vice President of Global Sales, told Bitcoin Magazine, outlining how Blockstream’s note duration differs from other similar financial products. “You rarely see (contracts) even out to 12 months.”

Blockstream offers the note in 1 PH/s increments because the petahash has become the industry standard for measuring hash price, and the contract duration corresponds to Bitcoin’s four-year half-life.

“We wanted to lock in a hash price for customers for four years that would basically last until the next halving,” he said.

The minimum investment for professional investors is $10,000, while non-professional investors have a minimum investment threshold of $115,000. The STO Shares will be fungible and available for trading, in both full and fractional form, on secondary markets including Bitfinex, SideSwap and Merj Exchange. Macedonio explained that Blockstream’s price is competitive because the note will sell at a 50% discount to the current hash spot price.

“If you want to buy hashrate, it will be much cheaper than buying a hashrate contract on the open market,” he said.

The success of BMN1

BMN1, which offered 2 PH/s over a 36-month term, mined 1,242 bitcoins, offering cash-on-cash returns of up to 103% and the aforementioned return of 32% over BTC. Blockstream aims to offer similar returns to investors as BMN2.

“We have priced BMN2 at a level where we believe investors will get the same kind of return,” Macedonio said.

“We sold BMN1 at about a 60% discount to what the hash price would have been at the time. With BMN2, we are selling at about a 50% discount to the current spot hash price. Future evening prices will depend on the hash price at that time,” he added.

Blockstream will reward investors who switch from BMN1 to BMN2 with a 3% bonus in additional BMN2 securities.

BMNs differ from similar products

Blockstream Mining Notes offers investors looking to gain exposure to bitcoin mining a unique value proposition.

“We have very cheap energy rates and we also get good prices for equipment,” Macedonio said. “So we can offer a hashrate at a very cheap price compared to other people.”

Macedonio pointed out that BMN2 is priced equivalent to hosting mining equipment at 4.5 cents per kilowatt hour (kWh), while large customers are currently paying more than 6.5 cents/kWh for hosting arrangements.

He also noted that with BMNs, investors do not need to buy machinery, nor do they have to worry about machine breakdowns or power cuts. In addition, investors do not face a delay in putting money for their investment and machines going online when purchasing BMNs.

“I don’t think there’s another product that can compete with it,” Macedonio said.