Digital asset infrastructure firm Blockstream has secured $125 million in funding aimed at expanding its bitcoin mining facilities.
Blockstream has received the funding in convertible note and secured loan financing, the company announced in a Tuesday press release, adding that it plans to use the money to expand its mining facilities amid increasing demand for large-scale hosting services. The statement read:
“Building on strong year-on-year revenue growth for 2022, Blockstream will use the new capital raised, including its first debt financing, to expand mining facilities in order to meet the strong demand for its institutional hosting services.”
The crypto infrastructure company said demand for its hosting services remains high due to Blockstream’s “strong track record and substantial scale, coupled with an industry-wide shortage of available power capacity.”
Previously, Blockstream raised $210 million in a Series B funding round aimed at building mining facilities with capacity for institutional hosting customers in August 2021, when cryptocurrency prices were near all-time highs. At the time, the company earned a $3.2 billion valuation. The firm’s Series A round was completed in 2016.
Blockstream said hosting has remained a resilient market despite the recent crypto meltdown that has seen the price of almost all digital assets, including Bitcoin, drop by almost 70% compared to their all-time highs.
On the other hand, proportional (PROP) miners, a system that pays miners based on the work they do between discovering one block and the next, have been hit harder due to their direct exposure to bitcoin price volatility and compressed margins.
“We remain focused on reducing risk for institutional bitcoin miners and enabling enterprise users to build high-value use cases,” said Erik Svenson, Blockstream’s president and chief financial officer.
As reported, the difficulty of mining a bitcoin block, a measure of how difficult it is to mine a Bitcoin block, increased by around 10% during the latest adjustment, suggesting that more miners are coming back online as prices continue to recover.
All in all, 2022 was one of the worst on record for the mining industry. Core Scientific, one of the largest Bitcoin mining companies, filed for bankruptcy in December last year amid plunging cryptocurrency prices and skyrocketing energy costs.
Aside from Core Scientific, other crypto mining firms are also struggling amid the market downturn. Argo Blockchain, Iris Energy, and Greenidge Generation are among the more notable Bitcoin mining companies to face financial issues.
It is worth noting that Bitcoin mining companies sold almost 100% of their mined BTC in 2022 in a bid to stay afloat. According to Tom Dunleavy, a senior research analyst at the blockchain research firm Messari, around 40,300 of the 40,700 BTC mined by ten public Bitcoin mining companies were sold last year.