Blockstream has opened the series 3 round of its second Mining Note, the BMN2. This new round follows the success of the earlier BMN1 and is aimed at eligible non-U.S. investors.
The repricing of the BMN2 from the earlier series 1 and 2 rounds, which took place on July 18, presents an attractive opportunity for investors seeking exposure to Bitcoin mining without directly managing hardware.
In this round, the BMN2 is priced at $31,000 per petahash per second (PH/s), with a hash price of $21.23.
Repricing and Investor Compensation
Compensation for Early Investors
Investors who participated in the earlier series 1 and 2 rounds, where BMN2 was sold at a higher price, will receive additional BMN2 units to compensate for the price difference. This approach ensures fairness across different rounds and provides an extra incentive for early adopters of Blockstream’s innovative mining notes.
Details of the BMN2 Offering
A Hashrate-Backed Security Token
The BMN2 is a hashrate-backed security token offering (STO) issued on Blockstream’s Liquid Network.
It is managed by the Luxembourg-based virtual asset service provider Stokr. Each BMN2 unit provides access to 1 PH/s of mining power at Blockstream’s North American mining operations for a duration of four years.
This extended duration makes BMN2 stand out compared to other hashrate contracts, which typically last between 30 days to six months.
Petahash as the Industry Standard
- Blockstream’s use of 1 PH/s increments aligns with the industry standard for measuring hash power.
- The contract duration matches Bitcoin’s four-year halving cycle, locking in a hash price for customers until the next halving.
According to James Macedonio, Senior Vice President of Global Sales at Blockstream, this approach offers stability and a long-term view, allowing investors to benefit from consistent returns over the duration of the contract.
Investment Details
Minimum Investment Thresholds
- Professional investors: Minimum investment of $10,000
- Non-professional investors: Minimum investment of $115,000
The shares of the BMN2 will be fungible and available for trading on several secondary markets, including Bitfinex, SideSwap, and Merj Exchange. The availability of fractionalized shares adds flexibility for investors who may not want to purchase a full PH/s unit.
Competitive Pricing
Blockstream is offering BMN2 at a significant discount compared to open market contracts for hashrate. The 50% discount to the current spot hash price makes this offering more appealing to investors looking for exposure to Bitcoin mining at a lower cost.
Advantages of BMN2 Pricing
- BMN2 offers cheaper access to hashrate than buying contracts on the open market.
- It is priced competitively at the equivalent of hosting mining equipment at 4.5 cents per kilowatt-hour (kWh), compared to the 6.5 cents/kWh that large customers pay for hosting arrangements.
The Success of BMN1
Strong Returns from the First Mining Note
The success of the BMN1 offering, which delivered impressive returns, has set the stage for BMN2. BMN1 provided 2 PH/s over a 36-month term and generated 1,242 Bitcoin, yielding up to 103% cash-on-cash returns and a 32% return over Bitcoin.
Targeting Similar Returns with BMN2
Blockstream aims to replicate the success of BMN1 with BMN2, offering investors a similar value proposition. According to Macedonio, BMN2 has been priced at a level where Blockstream believes investors will see comparable returns.
The 50% discount offered in the BMN2 pricing aligns with the 60% discount that BMN1 was sold at, further solidifying Blockstream’s commitment to delivering value to its investors.
Bonus for Roll-Over Investors
Incentives for BMN1 Investors
Investors who choose to roll over from BMN1 to BMN2 will be rewarded with a 3% bonus in additional BMN2 securities. This bonus incentivizes continued investment in Blockstream’s mining notes and encourages long-term participation in their mining operations.
Why BMNs Stand Out
Unique Value Proposition
Blockstream’s Mining Notes (BMNs) offer a unique opportunity for investors to gain exposure to Bitcoin mining without the headaches associated with managing mining equipment. BMNs provide several advantages over traditional mining contracts:
- BMNs offer access to low-cost energy and top-tier mining equipment, thanks to Blockstream’s industry connections and optimized infrastructure.
- Investors avoid the need to buy and manage physical mining machines, eliminating concerns about machine failures or power issues.
- There is no lag between investment and operational commencement, meaning investors see returns without delays caused by setting up or deploying mining rigs.
Competitive Edge
Macedonio emphasized BMN2’s competitive edge, noting that Blockstream’s pricing strategy offers a cost-effective solution for investors. The BMN2, priced at 4.5 cents/kWh, is significantly cheaper than what large-scale customers typically pay, further enhancing its appeal in the market.
BMNs vs. Traditional Mining Contracts
No Machine Purchases or Delays
Unlike traditional mining contracts, which often require purchasing expensive mining rigs and waiting for them to become operational, BMNs eliminate this burden. Investors in BMNs simply invest in the mining note and start earning from the mining operations immediately.
Minimized Risk
With BMNs, investors don’t have to worry about the risk of machine failures, power curtailments, or other technical issues that can arise in traditional mining setups. Blockstream’s infrastructure handles all the technical complexities, allowing investors to enjoy a more streamlined investment process.
Conclusion
BMN2: An Attractive Opportunity for Bitcoin Mining Investors
The launch of Blockstream’s BMN2 Mining Note offers investors a chance to gain exposure to Bitcoin mining through a competitive and well-structured product.
With its attractive pricing, strong track record from the BMN1, and long-term contract tied to the Bitcoin halving cycle, BMN2 stands out as a compelling investment option for those looking to participate in the future of Bitcoin mining.
By offering low-cost access to high-performance mining infrastructure, Blockstream is paving the way for more investors to benefit from Bitcoin’s growing network while avoiding the complexities of traditional mining setups.