Today Blockstream opens the second round of the third series 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 took place on July 18. This round of BMN2 is priced at $31,000 petahash per second (PH/s), or a hash price of $21.23. Investors who purchased BMN2 in series 1 and 2 rounds, in which the note was sold at a higher price, will receive additional BMN2 to make up for the price difference between the first two rounds and the third.
The issuance of the BMN2 follows hot on the heels of the success of the first Blockstream Mining Note, the BMN1, which delivered a 32% return on investment versus BTC.
Details of the BMN2
The BMN2 will be a hashrate-supported security token offering (STO) issued on Blockstream’s Liquid Network by a Luxembourg-based Virtual Asset Service Provider (VASP) StokrThe note offers 1 PH/s at Blockstream’s North American mining operations for four years.
“Hashrate contracts typically last anywhere from 30 days to six months,” James Macedonio, Blockstream’s senior vice president of global sales, told Bitcoin Magazine, highlighting how Blockstream’s note duration differs from other financial products like it. “Rarely do you see (contracts) even go as long as 12 months.”
Blockstream is offering the loan in increments of 1 PH/s because petahash has become the industry standard for measuring hash price and the contract term aligns with the four-year Bitcoin halving cycle.
“We wanted to lock in a hash price for customers for four years, which will essentially run until the next halving,” he said.
The minimum investment for professional investors is $10,000, while non-professional investors have a minimum investment threshold of $115,000. Shares of the STO are fungible and available for trading, in both whole and fractional form, on secondary markets, including Bitfinex, Side change And Merj exchangeMacedonio explained that Blockstream’s pricing is competitive, as the note is selling at a 50% discount to the current spot hash price.
“If you want to buy hashrate, it’s 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, yielding up to 103% cash-on-cash returns and the aforementioned 32% return over BTC. Blockstream aims to provide similar returns to investors with the BMN2.
“We priced the BMN2 at a level where we believe investors will get the same type of return,” Macedonio said.
“We sold BMN1 at about a 60% discount to what the hash price would have been at that time. With BMN2, we are selling at about a 50% discount to the current spot hash price. Future serial prices will depend on what the hash price is at that time,” he added.
Blockstream rewards investors who switch from BMN1 to BMN2 with a 3% bonus in additional BMN2 securities.
BMNs stand out from similar products
Blockstream Mining Notes offer a unique value proposition to investors looking to mine bitcoin.
“We get really cheap energy rates and we get good prices for equipment,” Macedonio said. “So we can offer a hashrate for a really cheap price compared to other people.”
Macedonio stressed that the BMN2 is priced at par with hosting mining equipment, at 4.5 cents per kilowatt hour (kWh), while large customers currently pay over 6.5 cents/kWh for hosting arrangements.
He also noted that with BMNs, investors do not need to purchase machines, nor do they have to worry about machine breakdowns or power outages. Moreover, investors do not experience any delay in depositing money for their investment and machines going online when they purchase BMNs.
“I don’t think there’s any other product that can compete with it,” Macedonio said.