Blockstream Mining Starts Third Investment Round for Hashrate-Backed Tokenized Note

In simpler terms, the first two rounds of the BMN2 event accumulated approximately $7 million in total. The upcoming third round will be valued at $31,000 per participant, providing them with Bitcoin generated every second (PH/s) of their hashrate. This sale is expected to continue for a span of three weeks. As stated by a company representative during an interview, Blockstream aims to secure $10 million in investments for the current round

“Blockstream is able to offer mining for under 4.5 cents per kilowatt-hour (kWh), which is far below the industry average,” the spokesperson said. “Anyone investing in BMN2 will benefit from access to the most cost-effective mining around.”

The firm, established by renowned Bitcoin developer Adam Back, is collaborating with Stokr for the transaction of the financial instrument

In the dynamic world of cryptocurrencies, a trend toward financialization is evident, with hashrate-backed contracts no longer being novel. However, what makes Blockstream’s note distinctive is its persistence. James Macedonio, Blockstream’s SVP of global mining sales and business development, highlights this point. BMN2, an EU-compliant security token, offers a glimpse into the bitcoin hashprice over a 48-month span

“Hashrate” signifies the overall computational power utilized in mining and processing transactions on a proof-of-work blockchain. It symbolizes competition within the industry as well as the mining difficulty level

Instead of investing in Bitcoin mining companies’ hashrate futures, purchasing Blockstream’s BMN2 note offers investors protection from counterparty risk and potential miner failures. The advantage lies in a fixed price for four years. Macedonio mentioned that the market hashprice is subject to adjustments every quarter, influenced by mining efficiency. Moreover, he explained that this hashprice incorporates risks associated with energy costs and counterparty issues

As a market analyst, I find it advantageous to mention that with the Bitcoin mining market witnessing unprecedentedly low hashrates currently, investing in BMN2 presents a strategic opportunity for investors to enter the market at a favorable moment, as expressed by the company in their July announcement regarding the note

Last month, a report from financial heavyweight JPMorgan (JPM) indicated that the current hash price is roughly 30% lower than its September 2022 peak and approximately 40% lower than the level prior to the April reward halving

Investors in the forebearer, BMN1, were predominantly international family offices and European funds. However, BMN2 is just beginning to attract interest from U.S. institutions, but currently, the product isn’t available there. Macedonio mentioned that many investors from BMN1 have already transitioned their investments into BMN2

BMN2’s initial two funding phases began on July 18 and concluded on Aug. 12. Major investors, who pledged more than half a million dollars, were offered a reduction and participated in round 1. Those who continued their investment from Blockstream’s BMN1 note or were new backers took part in round 2

Funds generated through the sale of the note are utilized to maintain the physical structures and cover energy expenses, as Blockstream oversees the hashrate that supports the note. This company operates mining facilities in Georgia, Montreal, and Texas

The tokenised note will trade on crypto exchange Bitfinex.