Today, Blockstream opens the series 3 round for its second Mining Note — the BMN2.
The note will be available to eligible non-US investors and has been repriced from the series 1 and 2 rounds, which occurred on July 18. This round of the BMN2 is priced at $31,000 petahash per second (PH/s), or a hash price of $21.23. Investors who purchased the BMN2 in the series 1 and 2 rounds, during which the note sold at a higher price, will be awarded extra BMN2 to make up for the difference in price between the first two rounds and the third.
The issuance of the BMN2 comes on the heels of the success of the first Blockstream Mining Note, the BMN1, which provided a 32% return over BTC.
Details of the BMN2
The BMN2 will be a hashrate-backed security token offering (STO) issued on Blockstream’s Liquid Network by Luxembourg-based virtual asset service provider (VASP) Stokr. The note offers 1 PH/s at Blockstream’s North American mining operations for four years.
“Hashrate contracts are typically 30 days up to six months,” James Macedonio, Senior Vice President of Global Sales at Blockstream, told Bitcoin Magazine, highlighting how the duration of Blockstream’s note differs from other financial products like it. “Rarely do you see [contracts] even go to 12 months.”
Blockstream is offering the note in 1 PH/s increments because petahash has become the industry standard for measuring hash price, and the contract’s duration corresponds with the four-year Bitcoin halving cycle.
“We wanted to lock in a hash price for customers for four years, which will basically run until the next halving,” he said.
The minimum investment for professional investors is $10,000, while non-professional investors have a $115,000 minimum investment threshold. Shares of the STO will be fungible and will be available for trading, in both full and fractionalized form, on secondary markets including Bitfinex, SideSwap and Merj Exchange. Macedonio explained that Blockstream’s pricing is competitive, as the note will sell for a 50% discount to the current spot hash price.
“If you're looking to buy hashrate, this is going to be a lot cheaper than buying a hashrate contract on the open market,” he said.
The Success Of BMN1
The BMN1, which offered 2 PH/s over a 36-month term, mined 1,242 bitcoin, delivering up to 103% cash-on-cash returns and the aforementioned 32% return over BTC. Blockstream is aiming to provide similar returns to investors with the BMN2.
“We priced the BMN2 to a level at which we feel investors will get the same type of return,” said Macedonio.
“We sold BMN1 at about a 60% discount to what would have been the hash price at the time. With the BMN2, we're selling at about a 50% discount to the current spot hash price. Future series pricing will be dependent on what the hash price is at that time,” he added.
Blockstream will reward investors who roll over from BMN1 to BMN2 with a 3% bonus in additional BMN2 securities.
BMNs Stand Apart From Similar Products
Blockstream Mining Notes offer investors looking to gain exposure to bitcoin mining a unique value proposition.
“We get really cheap energy rates and we get good pricing on equipment, as well,” said Macedonio. “So, we can offer a hashrate at a really cheap price compared to other folks.”
Macedonio highlighted that the BMN2 is priced at the equivalent to hosting mining equipment at 4.5 cents per Kilowatt hour (kWh), whereas large customers currently pay upwards of 6.5 cents/kWh for hosting arrangements.
He also noted that, with BMNs, investors don’t have to buy machines, nor do they have to worry about machine failures or power curtailment. Plus, investors don’t experience a lag in putting the money down for their investment and machines going online when they purchase BMNs.
“I don’t think there’s another product out there that competes with it,” said Macedonio.