Key Points
- Luxor Technology Corporation and Bitnomial Inc. have introduced a Bitcoin mining derivative product on Bitnomial’s US derivatives exchange.
- The product, known as Hashrate Futures, allows miners to hedge their revenue and investors to gain exposure to Bitcoin’s mining hash rate.
Bitcoin mining company Luxor Technology Corporation and Bitnomial Inc. have unveiled a Bitcoin mining derivative product on Bitnomial’s US derivatives exchange.
On May 28, Bitnomial declared the introduction of Hashrate Futures. This is a derivative futures contract for trading the computational power of the Bitcoin blockchain.
Hashrate Futures: A New Way to Trade
Bitnomial stated that the product, which trades under the ticker HUP, provides miners with a method to secure their income. It also gives investors a chance to gain exposure to Bitcoin’s mining hash rate.
In a futures contract, two parties agree to trade a financial asset at a future date for a predetermined price. This product trades Bitcoin’s computing power and is priced based on “hashprice”. This is a measure by Luxor of Bitcoin’s mining revenue potential.
Hashrate Futures contracts are 1 petahash (PH) in size for monthly durations. They use Luxor’s Bitcoin Hashprice Index as the reference rate for settlement. Luxor also offers non-deliverable Hashrate Forwards, which are over-the-counter products and do not settle on an exchange regulated by the Commodity Futures Trading Commission.
Understanding Hashrate Futures
Bitnomial’s founder and CEO, Luke Hoersten, clarified that Hashrate Futures are interchangeable with the company’s physical Bitcoin Futures. This allows for Hashrate to Bitcoin Futures spreads.
He explained that these spreads enable participants to take returns in either USD or BTC. It also separates hash rate risk from Bitcoin price risk.
Hashprice is a term created by Luxor. It refers to the anticipated value of 1 TH/s of hashing power per day. This quantifies how much a miner can expect to earn from a specific quantity of hash rate.
The current hashprice is $0.053 per terahash per second per day, as per HashRateIndex. It saw a spike around the halving event on April 20 to $0.140, but it fell afterwards when the block rewards were halved.
Since the start of 2024, Hashprice has declined by 46%. This makes it increasingly challenging for miners to generate a profit from their proof-of-work activities.
