Adam Back did not comment on the exact size of the offering and who the top backers are this time. However, he made it clear that the funds will be used to expand the company’s mining capabilities.
Blockchain technology firm Blockstream has recorded a significant valuation drop in its latest funding round, an aftermath of the sliding valuation in the digital currency ecosystem. As reported by Bloomberg citing people familiar with the fundraising, the company’s valuation may drop as low as $1 billion.
Blockstream Valuation and Plans for New Capital
This will be a significant change in valuation for the British Vancouver, Canada-based company which previously raised $210 million at a valuation of $3.2 billion. The last funding round which was in August 2021 was led by Baillie Gifford and Bitfinex, placing the company amongst the uprising crypto unicorns at the time.
According to data from Crunchbase, Blockstream has raised a total of $299 million before this latest fundraiser, and the valuation cut reflects how much of a blow the company has received throughout the tumultuous 2022 Calendar Year.
The firm was established in 2014 by Adam Back as an infrastructure service provider for the emerging blockchain ecosystem. The company acquired Israeli bitcoin mining hardware manufacturer Spondoolies in 2021, as it seeks to pivot to the manufacturing of specialized mining chips ASICS.
This industry niche is currently dominated by Bitmain and it offers a massive potential for Blockstream as the demand for high-performance mining chips has increased in the past few years. While the Bloomberg report depicted that the Blockstream fundraising is still ongoing, Back corrected a journalist who tweeted the news with a focus on the future tense of the event.
nb we already raised, tense wrong. potentially big difference between “trying to raise” and “raised”.
— Adam Back (@adam3us) December 6, 2022
Adam Back did not comment on the exact size of the offering and who the top backers are this time. However, he made it emphatically clear that the funds will be used to expand the company’s mining capabilities.
“We rapidly sold out all of the capacity and have a big backlog of existing and new customers with miners seeking large-scale hosting with us,” Back said, adding that “While Bitcoin price and mining profitability are down, hosting rates have risen over the last quarters and our mining services are a rapidly expanding, high-margin enterprise business for us.”
Other Firms Seeing Valuation Plunge
The collapse of top players in the cryptocurrency ecosystem today resulted in the exit of investors’ capital from the market across the board. While it was very obvious for top crypto stocks like Coinbase Global Inc (NASDAQ: COIN), other private entities also saw their valuations plunge massively.
According to reports, many digital currency service providers including Amber Group and Blockchain.com are also looking at raising new funds and will either be leaving their valuations flat or reducing them.
The liquidity crunch that pushed FTX towards bankruptcy is still rocking many firms today, and most need this fundraising to reposition their outfits to survive this current market onslaught.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
