Montréal-based startup Blockstream, which develops Bitcoin and blockchain technologies, has raised $167.3 million CAD ($125 million USD) in convertible note and secure loan financing as it hopes to optimize the volatile crypto market.
Kingsway Capital led the convertible note, with participation from other investors, including Fulgur Ventures. Blockstream said this recent capital sum will be allocated toward the expansion of its mining facilities to meet “the strong demand” for Blockstream’s institutional hosting services.
In 2021, Blockstream raised $266 million CAD ($210 million USD) in what it described as the first close of its Series B round. That financing brought Blockstream’s valuation to $4 billion. Samson Mow, who was CSO at Blockstream at that time, told BetaKit that Blockstream aimeds to raise between $300 million and $400 million USD for its Series B round, though the company hads not announced any additional funding between then and now. Mow left his role at Blockstream in March 2022, according to his LinkedIn page, and is now CEO of bitcoin company Jan3.
Bloomberg reported in December 2022 that Blockstream was raising new funding at a lower valuation than its 2021 Series B round. The outlet reported that people familiar with the matter said the valuation may be below $1 billion, which would strip Blockstream of its unicorn status designation.
Founded in 2014, Blockstream’s sidechain technology, dubbed Liquid Network, enables trustless Bitcoin swap settlements and smart contracts, while allowing financial institutions to tokenize assets. Among its blockchain-focused product suite, its Blockstream Mining offering provides colocation services to miners, across multiple enterprise-class mining facilities.
According to Blockstream, demand for its hosting services remains high despite volatility in the crypto market, due to its “strong track record and substantial scale, coupled with an industry-wide shortage of available power capacity.”
“Hosting has remained a resilient market segment as compared with ‘prop’ miners (and their lenders) who have been more directly exposed to bitcoin price volatility and compressed margins,” Blockstream said.
The cryptocurrency market is on a downward trend, with a string of negative news events in the space, including the downfall of FTX and most recently Genesis. Bitcoin is now worth around $17,000, compared to its $69,000 value in November 2021.
Blockstream touts itself as one of the world’s largest bitcoin mining operators, with over 500 megawatts in its development pipeline. The company said it also plans to expand its renewable energy mining products, and continue developing its own bitcoin miner.