Blockstream, the bitcoin development company, is launching a token that is linked to the company’s Bitcoin mining production and that can be redeemed in bitcoin.
A Blockstream Mining Note (BMN) represents 2,000 terahashes per second of hash of one of the mining facilities from Blockstream. The first tranche of 62.5 BMN will go on sale next week, April 7, and can be redeemed after three years for bitcoin equivalent to the total hashrate that the note represents.
Hashrate is the estimated total number of hashes or “guesses” used to extract bitcoin at a given time and is generally a good indicator for measuring the amount of energy that Bitcoin consumes at a given time; currently, the Bitcoin hashrate is approximately 164 exahashes per second.
Blockstream is issuing the token on its Liquid sidechain, a reliable, semi-privatized blockchain that works in parallel with Bitcoin, and will sell it initially through a private token sale on STOKR. The first batch of tokens will cost £ 200,000 ($ 275,836) each, and there is a minimum purchase of 1 BMN (payable in bitcoin, or BTC and USDT on the Liquid network).
The sale is open to all qualified non-US investors and tokens can be divided and transferred in amounts below 0.1 BMN and traded over the counter (OTC) after the sale.
“BMN builds on our vast experience in the Bitcoin mining space and offers investors upfront fixed rates with enhanced marketability,” explained Blockstream CEO Adam Back in a statement.
Hash rate tokens
Hash rate tokens are a recent development in the Bitcoin derivatives market, led by Bitcoin miner Poolin and the Binance exchange.
These contracts exist as a way for high-caliber investors to gain exposure to bitcoin and bitcoin mining without owning bitcoin directly or fumbling with mining hardware. Typically, they are traded OTC before being listed on the exchanges.
“In an ASIC and colocation market that is prohibitive for retail investment, tokens and hash contracts are a great way for investors to gain exposure to the mining sector. Given the ease of purchase, exchange rate liquidity and low barriers to entry, hashrate tokens are traded with a premium over physical ASICs, ”said Ethan Vera, from Luxor Mining, to CoinDesk. He added that the American mining company expects that premium to drop to 10% -15% with new hashrate tokens hitting the market.
Hash rate contracts are just one of many indirect ways in which investors can gain exposure to bitcoin. Bitcoin-holding companies like MicroStrategy and Square have offered equity exposure through what some see as a de facto bitcoin exchange-traded fund (ETF).
Historically, the most popular accredited investor option, Grayscale’s Bitcoin Trust (the company is owned by DCG, CoinDesk’s parent company) has recently lost its premium, as other options such as NYDIG’s bitcoin products and the volume of futures, grab market share (and how bitcoin ETF waits through Loyalty and other records are high).