Digital asset infrastructure company Blockstream has raised $125 million to fund its Bitcoin (BTC) mining colocation services, underscoring increased demand for its institutional hosting services amid the bear market.
The $125 million capital raise was funded by a convertible bond and a secured loan, Blockstream announced Jan. 24. Cohen & Cohen Capital Markets, part of JVB Financial Group, advised Blockstream on the transaction.
The funding will allow Blockstream to expand mining capacity for institutional hosting customers — a segment the company said is “resilient” in the face of bitcoin price volatility compared to so-called prop miners. This latter segment is “more directly exposed to bitcoin price volatility and compressed margins,” Blockstream said.
“We remain focused on reducing risk for institutional bitcoin miners and enabling enterprise users to build high-quality use cases,” said Erik Svenson, Blockstream’s President and Chief Financial Officer.
Related: BlockFi Sells $160M in Bitcoin Miner-Backed Loans: Report
A protracted crypto bear market, punctuated by multiple high-profile bankruptcies culminating in the collapse of FTX, put significant pressure on Bitcoin miners. In December, bitcoin mining giant Core Scientific filed for bankruptcy over falling revenues.
Miner Greenridge avoided bankruptcy in December by receiving a $74 million lifeline from New York Digital Investment Group.
As Cointelegraph reported, Bitcoin miners’ worst days may be over as hashrate stabilized and profit margins began to improve towards the end of 2022. However, the industry remains under pressure, especially for small and medium-sized miners with breakeven prices above $25,000 BTC.
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