Crypto infrastructure firm Blockstream raises $125 million to expand mining operations

In a convertible note and secured loan financing round, Bitcoin miner and hosting provider Blockstream raised $125 million, highlighting an increased demand for institutional hosting services in the bear market.

The firm will use the money to expand its capacity for institutional hosting clients – a segment the company said was ‘resilient’ amidst heightened price volatility when compared to so-called prop miners. Other mining services are struggling to stay afloat due to a prolonged decline in mining economics, and a backdrop of globally increasing interest rates which have squeezed businesses.

“Demand for Blockstream’s hosting services remains high due to the company’s strong track record and substantial scale, coupled with an industry-wide shortage of available power capacity,” the company said in a statement.

Blockstream’s chief financial officer, Erik Svenson, said: “We remain focused on reducing risk for institutional bitcoin miners and enabling enterprise users to build high-value use cases.”

The company currently has over 500 megawatts in its development pipeline, and the business also includes both hardware wallets and Layer-2 technologies like Core Lightning.

Data analyst James Straten noted the Lightning network capacity is currently approaching all-time highs, nearing 5000 BTC. Per the analyst, the economics are similar to 2019 at the depths of the previous bear market.

The fall of large scale players in the crypto space in 2022 and “resulting refocus on security and decentralisation presents an opportunity for market participants to move to Bitcoin-based non-custodial architectures,” CEO Adam Back said.

The firm raised $210 million in a series B funding round in 2021. In December, Bloomberg reported that it was on the lookout for new funds at a discounted valuation.