On Thursday, Bitcoin BTC
+0.63%
infrastructure developer Blockstream launched series 3 of its security token, the Blockstream Mining Note 2 (BMN2).
BMN2 is an EU-compliant security token available to qualified, non-U.S. investors. It provides exposure to the Bitcoin hash rate operated by the firmâs North American enterprise-grade mining facilities, offered in collaboration with the Luxembourg-based virtual assets service provider STOKR.
The launch comes in response to heightened investor interest in the mining industry, the firm claimed in a statement shared with The Block.
Each BMN2 security token entitles holders to the bitcoin produced by 1 PH/s (Peta hash per second) of Blockstreamâs mining hash rate. The firm said the token is designed to provide an onramp for investors to take part strategically in the market before the next Bitcoin halving.
The token aims to replicate the success of the first iteration of Blockstream's mining note (BMN1), which launched in 2021 and matured in July 2024. This token delivered a 32% bitcoin return over the three-year term in what STOKR co-founder and co-CEO Arnab Naskar describes as âthe highest payout in real-world asset security token history.â
While the Bitcoin industry has matured since 2021, with mining-adjacent investment products like hash rate contracts and hosted mining contracts becoming widely available to investors, Blockstream argues that they lack the secondary market liquidity, long-term fixed rates, instant exposure and market timing protection that BMN2 can provide.
âWe know first-hand the complexities involved in mining Bitcoin â hardware challenges, energy curtailment, and price fluctuation, to name a few. We created the BMN product to deliver a consistent hash rate with the goal of maintaining a strong and steady investment outcome,â Blockstream CIO Chris Cook said.
Below market hash price
BMN2 has raised nearly $7 million since its primary offering went live in July, the firm claimed. It offers an investment opportunity that can outpace bitcoin purchases on the spot market.
RELATED INDICES
It also includes safeguards such as a reserve of 50% of the stated hash rate to protect against potential miner failures, reduced efficiency and other issues.
Hash price is a term coined by Bitcoin mining services firm Luxor. It refers to the expected value of 1 PH/s of hashing power per day. The metric quantifies how much a miner can expect to earn from a specific quantity of hash rate.
BMN2 Series 3 offers a hash price of $21.23 for 48 months, equating to a fixed cost of $31,000 PH/s. According to The Block's data dashboard, this is significantly below the current market hash price of around $0.041 TH/s/day ($41 PH/s/day).
Bitcoin mining operations for BMN2 commenced this week at an equivalent hosting rate of less than $.045 kWh compared to an industry average of $.065 for enterprises and $.075 for retail customers, the firm claimed, adding that 80% of the power used for the operations is derived from carbon neutral sources.
Blockstream CEO and co-founder Dr. Adam Back is the inventor of the HashCash algorithm behind the proof-of-work protocol, a fundamental component of Bitcoinâs security architecture.
Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.
© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
