Blockware Raises $25M to Expand Bitcoin Mining Operations in Kentucky

The mining firm will use the funding to buy 14,000 rigs – 8,000 for itself and 6,000 to sell.

Jun 30, 2021 at 12:22 p.m. UTC
Updated Sep 14, 2021 at 1:19 p.m. UTC

Blockware has raised $25 million as North American bitcoin mining looks to seize the moment.

Blockware founder and CEO Michael Stoltzner declined to name entities involved in the funding round, but told CoinDesk the list of investors included several “prominent” individuals and crypto funds. This round brings Blockware’s total capital raised to date to $32 million since its launch in 2019.

The money will be used to purchase 14,000 mining rigs over the next two years, which Blockware has sourced from both Bitmain and the open market. The company will use 8,000 of the rigs to build out its new mining facility in Paducah, Ky., and will sell 6,000 rigs to other U.S.-based bitcoin mining operations. 

Stoltzner said he chose Paducah for Blockware’s first large-scale mining facility because the city had everything he was looking for: friendly government officials, plenty of skilled and unskilled labor, and most importantly, cheap energy. 

The Paducah facility will be built on land that is 100 yards from the Big Rivers Electric-operated energy source that will power Blockware’s rigs.

The Chinese government’s crackdown on mining operations has caused many to shut down, and bitcoin’s hashrate has plummeted in response. The situation has caused many in the crypto community to call for a more global, decentralized mining structure to reduce the network’s reliance on Chinese miners. Miners have also been under increased scrutiny in recent months as bitcoin’s sustainability debate, led by unofficial crypto figureheads including Tesla CEO Elon Musk, rages on. 

Power mix

Stoltzner said the company chose to source power from Big Rivers Electric because the company used a mix of renewable and non-renewable sources, including hydroelectric, wind and coal.

“Kentucky is the largest coal-producing state in the country,” Stoltzner said. “That’s the resource they have. It's a tough argument, and people in Kentucky feel different about that argument than people in California.”

Stoltzner said Blockware is working on a program to purchase carbon offsets and is in the early stages of joining the Michael Saylor-led Bitcoin Mining Council

According to Stoltzner, Blockware’s smaller-scale mining operations in upstate New York, Washington state and Newfoundland, Canada, are almost completely run on hydroelectric power. 

Ensuring the sustainability of North American bitcoin mining is part of Stoltzner’s larger stated goal of increasing the bitcoin hashrate in North America, which currently only accounts for an estimated 10% of the hashrate worldwide.

Bitcoin must be mined domestically in order to fully go mainstream in North America, Stoltzner said.

“What we’ve seen coming out of China and Eastern Europe – that’s not helping to legitimize bitcoin in the industry,” Stoltzner said. “I believe that companies operating out of the United States are very much legitimizing crypto and bitcoin. It’s got to happen out of the United States.”

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