Today, Blockstream opened its Series C round for the second time. Mining Note — BMN2.
The note will be Available to qualified non-US investors It was repriced from the first and second rounds of the series, which occurred on July 18. This round of BMN2 was priced at 31,000 petahashes per second (PH/s), or a hash price of $21.23. Investors who purchased BMN2 in the first and second rounds of the series, during which the note was sold at a higher price, will be given additional BMN2 to make up the difference in price between the first and third rounds.
The release of BMN2 comes on the heels of the success of the first Blockstream Mining Note, BMN1, which offered a 32% return on BTC.
BMN2 Details
BMN2 will be a hashrate-backed security token offering (STO) issued in Blockstream’s Liquid Network By a Luxembourg-based Virtual Asset Service Provider (VASP) StalkerThe note provides 1 PH/s in Blockstream’s North American mining operations for four years.
“Hashrate contracts are typically 30 days to six months. You rarely see[contracts]that go up to 12 months,” James Macedonio, Blockstream’s senior vice president of global sales, told Bitcoin Magazine, highlighting how Blockstream’s bond tenors differ from other financial products like it.
Blockstream offers the note in 1 PH/s increments because petahash has become the industry standard for measuring hashrate, and the contract duration is consistent with Bitcoin’s four-year halving cycle.
“We wanted to lock in the retail price for customers for four years, which will basically last until the next half,” he said.
The minimum investment for professional investors is $10,000, while the minimum investment for non-professional investors is $115,000. STO shares will be fungible and available for trading, in whole and fractional form, on secondary markets including Bitfinex, Side switch and Merge ExchangeMacedonio explained that Blockstream’s pricing is competitive, with the note being sold at a 50% discount off the current spot retail price.
“If you are looking to buy hashrate, it will be much cheaper than buying a hashrate contract on the open market,” he said.
BMN1 Success
BMN1, which offered 2 PH/s over a 36-month period, mined 1,242 BTC, generating a cash return of 103% and the aforementioned 32% return on BTC. Blockstream aims to provide similar returns to investors with BMN2.
“We have priced BMN2 at a level that we feel provides investors with the same type of return,” Macedonio said.
“We sold BMN1 at about a 60% discount from the retail price at the time. With BMN2, we are selling at about a 50% discount from the current retail price. Future series pricing will depend on the retail price at the time,” he added.
Blockstream will reward investors who migrate from BMN1 to BMN2 with a 3% bonus in additional BMN2 securities.
BMNs stand out from similar products
Blockstream Mining Notes provides investors looking to gain exposure to Bitcoin mining with a unique value proposition.
“We get really cheap energy prices and we get good equipment prices as well. So we can offer a really cheap hash rate compared to others,” Macedonio said.
Macedonio emphasized that the price of BMN2 is equivalent to hosting mining equipment at a rate of 4.5 cents per kilowatt hour (kWh), while large customers currently pay upwards of 6.5 cents per kWh for hosting arrangements.
He also pointed out that with BMNs, investors do not have to buy machines, nor do they have to worry about machines breaking down or power outages. In addition, investors do not face delays in putting money into their investments and operating machines when purchasing BMNs.
“I don’t think there’s another product that competes with it,” Macedonio said.