The Daily Dive #049— Blockstream Raises $210 million, MSTR Purchases 3,907 BTC

As covered earlier this morning by Bitcoin Magazine’s very own Nik Hoffman, the Bitcoin infrastructure and services company Blockstream has raised $210 million in funding during its most recent seed round, valuing the company at $3.2 billion.

“Some of the money raised will be spent on advancing Blockstream’s bitcoin mining products and services like Blockstream Energy. The new mining infrastructure they are building is planned to be used in many partnerships such as their collaboration with Square, where they are developing a solar-powered mining facility.

The rest of the money will be used to build financial infrastructure with bitcoin-focused financial products and Liquid, which is a sidechain-based settlement network that enables faster, more confidential bitcoin transactions.” - Bitcoin Magazine

Blockstream, which is headquartered in Victoria, Canada, will most definitely play a big role over the coming years in terms of North American ASIC production and manufacturing, which is sorely needed since most semiconductor chip and ASIC manufacturing is currently happening offshore.

In a world where supply chains have never been more backlogged, domestic manufacturing of mining rigs should be considered a matter of national security for the United States. Although Blockstream itself is located in Canada, recently announced partnerships with companies like Square to develop solar-powered mining facilities is critical in the global bitcoin arms race.

The monetization process of bitcoin will only happen once. When looking throughout the history of the network, the BTC one can acquire per hash has only decreased over time in an exponential decay fashion.

MicroStrategy Continues Aggressive Accumulation

On June 15 in The Daily Dive #005, we covered MicroStrategy’s various bitcoin accumulation strategies and in particular the recent “At The Market” Securities Offering.

The Genius of the “At The Market” Securities Offering

MicroStrategy’s latest announcement is just the latest showing in the masterclass the company is conducting in corporate finance on a bitcoin standard.

The move is significant for multiple reasons:

1) Equity dilution on the open market to acquire more bitcoin gives shareholders less ownership of the company, but more bitcoin per share. Shares of MicroStrategy gain additional ownership of the bitcoin network, but conversely see a decline in proportional ownership of the company’s enterprise software business.

2) The move gives the company the ability to protect the bitcoin market on the downside and/or take advantage of misallocations in the bitcoin price or MicroStrategy’s equity price. As the price of bitcoin continues to rise in the months and years that follow, the market cap of MicroStrategy will rise, giving the company a bigger weight in equity indices, which subjects the company to more passive investing flows.

In a virtuous cycle, MicroStrategy can use this strategy to obtain an absolutely massive amount of bitcoin and remain one of the biggest players in the market.

Michael Saylor and MicroStrategy are actively writing the playbook for corporations on a Bitcoin Standard, and their intentions could not be any more clear.

Acquire Bitcoin at all costs, and use the artificially suppressed cost of capital to do it.

MicroStrategy reported in an 8-k document, that the company had sold 238,053 shares of MSTR for a total of $177.5 million and used the proceeds to acquire an additional 3,907 BTC. This places MicroStrategy’s total holdings at 108,992 BTC at an average purchase price of $26,729.

This move essentially increases the proportional bitcoin ownership for MSTR shareholders and in part helps to place a bid in the bitcoin market to support the price (marginally). MicroStrategy is taking advantage of the near record-high capitalization rates that exist in public markets to acquire more bitcoin for its shareholders and, as price rises, continue to use credit markets to leverage up.

While it isn't exactly clear why MicroStrategy chose to allocate the $177 million worth of capital at the $45,000 level, don’t expect this to be the last time that MicroStrategy chooses to dilute its equity to increase bitcoin ownership on a per share basis.

MicroStrategy increased shares outstanding by 238,053 diluting shareholder equity, but the move increased $MSTR per share BTC holdings by approximately 2,182 sats from 0.01089260 BTC to 0.01091442 BTC.