Luxor Technology Corporation and Bitnomial Inc. introduced the world’s first Bitcoin mining derivative. The new product will be available on a regulated exchange in the United States and will allow miners and investors to hedge the risks associated with the Bitcoin network’s hashrate.
Mining company Luxor Technology Corporation announced the release of Hashrate Futures, a derivative futures contract for trading Bitcoin’s hashrate. Hashrate Futures trades under the ticker HUP on the Bitnomial derivatives exchange, licensed in the United States.
A futures contract is a derivative in which two parties enter into a transaction to buy or sell an asset, committing to realize it by a certain point in the future at a pre-agreed price.
According to Matthew Williams, Head of Derivatives at Luxor Technology Corporation, the new contracts allow miners to hedge their income and investors to gain access to Bitcoin mining hashrate. Hashrate Futures enable trading of Bitcoin’s hashrate, which is priced at the hashprice — the expected value of 1 PH/s of processing power per day. It shows how much a miner can earn from a certain amount of hashrate. Contracts expect to use 1 PH of computing power over a month and use Bitcoin Hashprice Index as the prime rate for calculations.
Luke Hoersten, Founder and CEO of Bitnomial, added that Hashrate Futures will be traded in tandem with physical Bitcoin futures issued by the company. Therefore, it’ll “allow participants to take returns in either USD or BTC, or isolate hashrate risk from Bitcoin price risk.”
According to HashRateIndex data, the hashprice started to rise strongly in February 2024, doubling two months ahead of the halving of the Bitcoin network, reaching $170 per PH/s on April 21. However, block rewards were halved, and the hashprice plummeted to $44 per PH/s in early May. The hashprice dropped 46% since the beginning of 2024. The current hashprice is $53 per PH/s per day.
Analysts predicted that about 20% of BTC mining installations may become unprofitable after halving, so companies began actively developing new mining devices. Block introduced a specialized chip for Bitcoin mining based on three-nanometer technology.
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