Luxor Technology Corporation and Bitnomial Inc. have partnered to introduce a new Bitcoin mining derivative product on Bitnomial’s US derivatives exchange. This innovative product allows investors to speculate on future hashrates and hashprices, providing new avenues for both hedging and investment in the cryptocurrency space.
Launch of Hashrate Futures
On May 28, Bitnomial announced the release of Hashrate Futures, a derivative futures contract designed to trade the computing power of the Bitcoin blockchain. This product, trading under the ticker HUP, enables miners to hedge their revenue while offering investors exposure to Bitcoin’s mining hash rate.
A futures contract is a financial derivative where two parties agree to buy and sell an asset at a predetermined future date and price. Hashrate Futures specifically trade Bitcoin’s computing power, with pricing based on “hashprice,” a metric developed by Luxor to measure Bitcoin mining revenue potential.
Product Specifications
Hashrate Futures contracts are available in 1 petahash (PH) increments with monthly durations. They use Luxor’s Bitcoin Hashprice Index as the reference rate for settlement. Additionally, Luxor offers non-deliverable Hashrate Forwards, which are over-the-counter products not regulated by the Commodity Futures Trading Commission (CFTC).
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Benefits and Functionality
Bitnomial’s founder and CEO, Luke Hoersten, highlighted that Hashrate Futures are fungible with the firm’s physical Bitcoin Futures. This fungibility allows for Hashrate to Bitcoin Futures spreads, enabling participants to take returns in either USD or BTC, and to manage hash rate risk separately from Bitcoin price risk.
Understanding Hashprice
Hashprice, a term coined by Luxor, represents the expected value of 1 TH/s of hashing power per day, indicating potential earnings for miners based on their hash rate. As of now, the hashprice stands at $0.053 per terahash per second per day. It spiked to $0.140 around the halving event on April 20 but declined after the block rewards were halved. Since the start of 2024, hashprice has dropped 46%, making profitability a significant challenge for miners engaged in proof-of-work activities.
