Blockstream secures 266 million CAD at 4 billion valuation to monetize the Liquid Network | BetaKit

With years spent building its sidechain-based settlement network, blockstream has raised a significant amount of funding to continue blending the worlds of finance and industrial bitcoin mining.

The bitcoin infrastructure startup has raised C$266 million ($210 million US), in what the firm described as the first closing of its series b round. With the new funding, blockstream has secured a 4 billion Canadian dollar ($3.2 billion) valuation, making it Canada’s newest unicorn.

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The primary and full equity round, which closed earlier this month, was fully backed by new block investors. The round was led by Baillie Gifford, with the participation of Ifinex and other undisclosed investors.

blockstream, founded in 2014, is a blockchain technology company that creates bitcoin infrastructure and products. Headquartered in Victoria, the startup has offices in Montreal (where it is incorporated) and Mountain View, California, with a remote team located around the world.

With the new financing, blockstream has achieved a valuation of 4 billion Canadian dollars, making it Canada’s latest unicorn.

The company’s liquid network is a sidechain-based settlement network that claims blockstream enables faster and more confidential bitcoin transactions, as well as the issuance of digital assets for bitcoin merchants and exchanges. blockstream first launched the liquid network in 2018; since then, it has seen “impressive ecosystem growth,” amassing more than $1.1 billion in network value, according to the company.

Now, blockstream has set its sights on monetizing the liquid network with financial products. in an interview with betakit, blockstream cso samson mow cited the recent launch of the blockstream mining note (bmn), a securitization of a portion of blockstream’s bitcoin mining operations, as an example of the type of investment product that the startup plans to implement.

“We’re at a point in our growth where we need additional capital to fuel a number of our initiatives,” mow told betakit. “We’ve been building a lot of infrastructure on the software side, like the liquid network… we’ve been building financial products. we acquired a hedge fund so we could create our own financial products and instruments on our own network.”

blockstream plans to use the fresh capital to fuel the next stage of its growth, including expanding into a new type of mining hardware and launching bitcoin financial products in addition to the liquid network, which the startup sees as key revenue. . growth opportunity.

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“so right now we’re sort of merging the worlds of finance and industrial bitcoin mining, but the finance side of our business is going to grow,” mow said. “We’re going to have hedge fund-type products like alpha funds, essentially bitcoin alpha funds and US dollar alpha funds, and other innovative things that we can’t really mention right now.”

according to mow, blockstream has an ultimate goal of raising between $300 million and $400 million for its series b round. he said the startup will likely close additional funding soon, adding that blockstream expects to receive “additional interest” following this announcement.

Along with the new funding, blockstream has also announced the acquisition of Israeli cryptocurrency mining hardware company Spondoolies. blockstream has acquired the intellectual property (ip) and core team of spondoolies for an undisclosed amount, financing the deal using a combination of equity and prior equity.

spondoolies, which has designed and built five different crypto mining products, is a semiconductor chip design company. The company joined BlockStream to help build the startup’s application-specific integrated circuit (ASIC) arm. an asic is an integrated circuit chip customized for a particular use.

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“Blockstream will onboard the core team of spondoolies and acquire related IP to launch the world’s first enterprise-class miner next year,” said Adam Back, CEO and co-founder of Blockstream. “spondoolies team’s pedigree in bitcoin asic design and engineering complements our enterprise-class mining infrastructure and will accelerate our continued expansion and decentralization of the bitcoin mining space.”

The spondoolies deal is Blockstream’s third acquisition to date. In May, Spondoolies acquired Adamant Capital, a Texas-based Bitcoin hedge fund manager. The transaction laid the foundation for the launch of Blockstream Finance, a division focused on launching new Bitcoin investment products on the liquid network. mow said that blockstream’s current focus is to develop its own technology, but added that the company remains open to more acquisitions “in the future.”

blockstream’s series b round comes five years after the company raised its series a round in early 2016. “we didn’t really start looking at this until probably the middle of last year, just because it wasn’t necessary”. said mowing. “We have bitcoin on our balance sheet, we were doing it long before the micro strategy did, so we had a pretty big war chest. we didn’t really need to raise capital.”

The new capital brings blockstream’s total funding to date to approximately 366 million Canadian dollars. The company’s previous investors include real companies, ame cloud companies, axa strategic companies, blockchain capital, digital currency pool, digital garage, perfect future companies, horizon companies, eastern companies, khosla companies, mosaic companies and partners of seven seas.

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In 2017, after mow joined blockstream, the startup moved into bitcoin mining, which today represents the company’s main revenue generator. Currently, BlockStream also derives a significant portion of its revenue from the company’s data partnership with the Intercontinental Exchange, the owner and operator of the New York Stock Exchange. blockstream pulls cryptocurrency trading data from exchanges around the world into a consolidated feed, which the intercontinental exchange sells to its institutional clients.

Going forward, blockstream also plans to use some of the fresh capital to expand its mining operations by launching new facilities, a process mow describes as “very capital intensive.” The startup currently has mining facilities in Québec and Georgia, United States, and intends to expand to a number of other undisclosed sites.

In response to a question about what the size of this round and blockstream’s latest valuation means for the Canadian blockchain ecosystem, mow said, “I think it’s good for companies that are building on bitcoin, but I don’t think it’s there are so many in canada.”

blockstream recently met with officials from el salvador to discuss issuing a US dollar-denominated digital bond on the liquid network, after el salvador adopted bitcoin as legal tender in June, becoming the first country in the world to do it.

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“what we are now focused on discussing with [el salvador] is the possible bond offer,” mow said. “They are very interested in issuing their bonds on a liquid network using our security token infrastructure. So, that’s still up for discussion.”

mow said that progress on this front has been slow over the past two weeks. “We’ve been busy with our B round, and they’re busy with implementing bitcoin law,” he said.

On the product side, blockstream recently launched blockstream energy, designed to maximize returns on investment in renewable energy at power production sites. The startup plans to use this infrastructure in partnerships around the world, including collaborating with Square to develop an open-source, solar-powered mining facility in the United States.

blockstream currently has around 70 employees. To support its growth plans, the startup intends to double or triple the size of its team in the coming years. According to Mow, Blockstream is seeking to recruit employees in marketing, business development, engineering, and project management roles; in other words, “pretty much everything,” he said.

“baillie gifford is committed to supporting early-stage transformational growth companies,” said a spokesperson for baillie gifford. “We have enormous respect for the founders and management team of blockstream, and believe their bitcoin-based securities and asset settlement network has the potential to transform the design and operation of capital markets.” /p>

images courtesy of blockstream

See also: 8 Pros and Cons of Bitcoin – MintLife Blog

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