Blockchain.com Raises US$300 Million as Investors Find Other Ways Into Bitcoin
The investment round gave the company a US$5.2 billion valuation
2 min
Blockchain.com, a London-based firm that provides a variety of cryptocurrency services to retail and institutional clients, raised $300 million in a deal that highlights venture capital’s growing willingness to jump back into the bitcoin frenzy.
The investment round gave the company a US$5.2 billion valuation and was led by DST Global, Lightspeed Venture Partners and VY Capital. It comes just one month after the company raised $120 million in a funding round that valued it at $3 billion.
Blockchain.com has 31 million verified users across 200 countries and 70 million digital “wallets,” or software used to store bitcoins. The firm offers retail trading and a range of services for professional investors like credit, structured products, trading and custody. Between debt and equity, the company has raised $1.5 billion since its inception in 2011, according to Chief Executive Peter Smith.
It is a significant amount for a crypto company. The latest capital raise is the third-largest in the industry’s short history, according to research firm CB Insights. In 2018, Bitmain Technologies raised $400 million. Earlier this year, BlockFi raised $350 million and in 2020, Bakkt raised $300 million.
Capital raising also stagnated over the past few years as bitcoin’s price fell from its 2017 highs and remained down. After raising $4.5 billion in 2018, deals have declined to $2.7 billion in 2020. Their re-emergence this year, with three of the six largest to date coming in 2021, is spurring hopes that private investors are returning.
They may be followed by public investors. Later this year, Coinbase Global Inc. will launch its highly anticipated initial public offering. The company plans to sell up to 115 million shares on Nasdaq, raising up to $943 million, according to its most recent filing with the Securities and Exchange Commission.
If that IPO is successful, other crypto companies are expected to follow. Whether Blockchain.com will be one of them hasn’t been determined. “The company is carefully considering its public-market options,” Mr. Smith said.
Blockchain’s business has more than doubled since the start of the year, Mr. Smith said, amid a boom for bitcoin and other cryptocurrencies. If the current rate stays constant, he predicted the company’s 2021 profit would hit a record in the “mid-nine digits.”
That is mainly because the price of bitcoin has skyrocketed over the past year. In March 2020, bitcoin fell to around $5,700. On Tuesday, it was trading around $55,000. The gains have been driven by an influx of money from the likes of billionaire investors including Paul Tudor Jones, companies including Massachusetts Mutual Life Insurance Co. and a new wave of retail, or nonprofessional, investors.
The company plans to use the new capital to hire new employees and to support its institutional business. “The institutional side requires more capital,” Mr. Smith said. “When you’re pitching asset managers they want to see a big balance sheet.”
Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: March 24, 2020
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New research suggests spending 40 percent of household income on loan repayments is the new normal
3 min
Requiring more than 30 percent of household income to service a home loan has long been considered the benchmark for ‘housing stress’. Yet research shows it is becoming the new normal. The 2024 ANZ CoreLogic Housing Affordability Report reveals home loans on only 17 percent of homes are ‘serviceable’ if serviceability is limited to 30 percent of the median national household income.
Based on 40 percent of household income, just 37 percent of properties would be serviceable on a mortgage covering 80 percent of the purchase price. ANZ CoreLogic suggest 40 may be the new 30 when it comes to home loan serviceability. “Looking ahead, there is little prospect for the mortgage serviceability indicator to move back into the 30 percent range any time soon,” says the report.
“This is because the cash rate is not expected to be cut until late 2024, and home values have continued to rise, even amid relatively high interest rate settings.” ANZ CoreLogic estimate that home loan rates would have to fall to about 4.7 percent to bring serviceability under 40 percent.
CoreLogic has broken down the actual household income required to service a home loan on a 6.27 percent interest rate for an 80 percent loan based on current median house and unit values in each capital city. As expected, affordability is worst in the most expensive property market, Sydney.
Sydney
Sydney’s median house price is $1,414,229 and the median unit price is $839,344.
Based on 40 percent serviceability, households need a total income of $211,456 to afford a home loan for a house and $125,499 for a unit. The city’s actual median household income is $120,554.
Melbourne
Melbourne’s median house price is $935,049 and the median apartment price is $612,906.
Based on 40 percent serviceability, households need a total income of $139,809 to afford a home loan for a house and $91,642 for a unit. The city’s actual median household income is $110,324.
Brisbane
Brisbane’s median house price is $909,988 and the median unit price is $587,793.
Based on 40 percent serviceability, households need a total income of $136,062 to afford a home loan for a house and $87,887 for a unit. The city’s actual median household income is $107,243.
Adelaide
Adelaide’s median house price is $785,971 and the median apartment price is $504,799.
Based on 40 percent serviceability, households need a total income of $117,519 to afford a home loan for a house and $75,478 for a unit. The city’s actual median household income is $89,806.
Perth
Perth’s median house price is $735,276 and the median unit price is $495,360.
Based on 40 percent serviceability, households need a total income of $109,939 to afford a home loan for a house and $74,066 for a unit. The city’s actual median household income is $108,057.
Hobart
Hobart’s median house price is $692,951 and the median apartment price is $522,258.
Based on 40 percent serviceability, households need a total income of $103,610 to afford a home loan for a house and $78,088 for a unit. The city’s actual median household income is $89,515.
Darwin
Darwin’s median house price is $573,498 and the median unit price is $367,716.
Based on 40 percent serviceability, households need a total income of $85,750 to afford a home loan for a house and $54,981 for a unit. The city’s actual median household income is $126,193.
Canberra
Canberra’s median house price is $964,136 and the median apartment price is $585,057.
Based on 40 percent serviceability, households need a total income of $144,158 to afford a home loan for a house and $87,478 for a unit. The city’s actual median household income is $137,760.
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