Peter Thiel's Founders Fund led a $3.7 million seed equity round into Block Green, a lending protocol that aims to enable bitcoin staking.
Other investors in the round, which closed in early June, included Coinbase Ventures, Blizzard and Dao5, according to an announcement. Founder Sebastien Hess didn't disclose the valuation to The Block. He founded the company in December last year with former Mastercard exec Bastian Becker.
Built initially on the Bitcoin Core with plans to move to other chains thereafter, Hess said that he wants to build what he calls "Bitcoin DeFi." He aims to serve miners who he says haven't been served well by traditional lenders.
"Right now, loans are backed by Asics — the hardware used to mine crypto — which is essentially pegged to the price of bitcoin," explained Hess. "As a lender, your collateral is basically very sensitive to the price of Bitcoin. If Bitcoin goes down, it's very likely the miners will actually go bust."
Block Green allows bitcoin miners to use their future Bitcoin production as collateral by borrowing against their hash power. Bitcoin holders can then lend their assets and receive a cut of the Bitcoin produced by such miners.
According to The Block Research, Bitcoin's hash rate is currently estimated to be at 229.19 exahashes per second as of last week.
News of the round comes as other players seek to offer access to capital for bitcoin miners who struggle to access traditional capital markets. On Tuesday, Icebreaker Finance and DeFi lending platform Maple launched a $300 million lending fund for bitcoin miners.
Block Green, as the name suggests, said that it would only work with sustainable miners with two big-name mining players already signed up for its early October pilot.
"We're running a form of due diligence on the miners," explained Hess. "Aside from the classical financial aspects of due diligence, there's also the energy side. Along with the renewable energy requirement, we look at other aspects such as how the energy is used, and how they recycle their eco emissions, and then give them a form of credit scoring."
This credit scoring is then used to judge whether a miner is onboarded to Block Green.
The company will use the funding to develop the protocol further and build out its team. Hess also said it is hiring the current director of miner finance at crypto lender BlockFi, Patrick Guerriero. It will also continue to establish partnerships with miners, focusing on the US and Canada, and liquidity providers.
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