Blockstream intends to secure additional funds for purchasing Bitcoin mining hardware through its second series of Blockstream ASIC (BASIC) Note products. These products are tailored to procure and sell ASICs based on the predicted demand for mining rigs over the upcoming two years.
Blockstream CEO Adam Back highlighted the surplus of Bitcoin mining hardware in the secondary market as a primary motivator for their second investment offering. Initially raising $5 million, the company used a portion to acquire an unused boxed Antminer S19k Pro ASIC miner, valuing at $4.87 million, through SunnySide Digital. Back elaborated that this circumstance presented an opportunity due to increased Bitcoin prices by 2.8 times, whereas mining rig prices plummeted from $35 to $13.50 per terahash.
Emphasizing the fund's objective, Back stressed that Blockstream is not seeking the highest dollar price for miners but rather striving for optimal Bitcoin price appreciation for miners. The strategy involves storing acquired hardware in warehouses and subsequently selling it on the market, aligning with increased profitability for miners amidst the anticipated surge in Bitcoin's value.
The timing of selling mining rigs is crucial and is influenced by several factors, including the decrease in available rigs in the secondary market. Back pointed out that this scarcity would drive buyers directly to manufacturers, consequently raising the price per terahash unit.
Reflecting on their prior experience in 2021, Blockstream initially acquired miners for hosting services but ended up selling surplus rigs for a significantly higher price due to limited capacity. This unplanned success underscored the significance of the "time value" of money and reiterated the dependence on Bitcoin prices for profitable Bitcoin mining hardware sales.
Back further explained that the cost-effectiveness of mining electricity significantly improved during the previous Bitcoin bull market, causing miners to consider the Bitcoin value when purchasing hardware. The forthcoming Blockstream ASIC (BASIC) Note Series 2, managed by the Luxembourg-based security token platform STOKR, will be launched around the new year. This offering targets accredited non-U.S. investors and requires a minimum investment of $115,000 in BTC, Liquid Bitcoin (L-BTC), or Tether, adapting to market conditions and investor demand.
