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 the price for Series 1 and Series 2 rounds, which took place on July 18, has been modified. This round of BMN2 is priced at 31,000 petahash per second (PH/s), or a hash rate of $21.23. Investors who purchased BMN2 in Series 1 and Series 2 rounds, during which the bond 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 round.
The issuance of BMN2 comes on the heels of the success of the first Blockstream Mining Note, BMN1, which provided a 32% yield on btc.
Details of BMN2
BMN2 will be a hash rate-backed security token offering (STO) issued in Blockstream Liquid Network by Luxembourg-based virtual asset service provider (VASP) StockThe note offers 1 PH/s on Blockstream's North American mining operations over four years.
“Hashrate contracts typically range in duration 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 similar financial products. “You rarely see contracts that reach 12 months.”
Blockstream offers the note in increments of 1 PH/s because petahash has become the industry standard for measuring hash rate, and the contract duration corresponds to bitcoin’s four-year halving cycle.
“We wanted to lock in a hash price for customers for four years, which will basically last 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. STO shares will be fungible and available for trading, both in full and fractional form, on secondary markets, including Bitfinex, Change of side and Merj ExchangeMacedonio explained that Blockstream's price is competitive, as the note will be sold at a 50% discount to the current spot hash price.
“If you're looking to buy hashrate, this will be much cheaper than buying a hashrate contract on the open market,” he said.
The success of BMN1
BMN1, which offered 2 PH/s for a 36-month term, mined 1,242 bitcoins and generated a cash yield of up to 103% and the aforementioned 32% return on btc. Blockstream aims to provide similar returns to investors with BMN2.
“We have priced BMN2 at a level where we believe investors will get the same type of return,” Macedonio said.
“We sold BMN1 at a discount of about 60% to what the hash price would have been at the time. With BMN2, we are selling at a discount of about 50% to the current spot hash price. The price of future series will depend on what the hash price is at the time,” he added.
Blockstream will reward investors who move from BMN1 to BMN2 with a 3% bonus in additional BMN2 securities.
BMN are distinguished from similar products
Blockstream Mining Notes offer investors looking to gain exposure to bitcoin mining a unique value proposition.
“We get very cheap power rates and also good prices on equipment,” Macedonio said. “Therefore, we can offer hash rate at a really cheap price compared to other companies.”
Macedonio highlighted that BMN2 is priced equivalent to hosting mining equipment at 4.5 cents per kilowatt hour (kWh), while large customers currently pay more than 6.5 cents/kWh for hosting agreements.
He also noted that with BMNs, investors do not have to purchase machines or worry about machine failures or power outages. Moreover, investors do not experience any delays in depositing the money for their investment and getting the machines up and running when they purchase BMNs.
“I don’t think there is another product that can compete with it,” Macedonio said.
