Key takeaways:
- Bitnomial Inc. and Bitcoin mining company Luxor Technology Corporation have introduced a derivative product for Bitcoin mining on Bitnomial’s US derivatives exchange.
- Two parties agree to buy and sell a financial asset at a future date for a predetermined price in a futures contract, which is a financial derivative.
Bitnomial Inc. and Bitcoin mining company Luxor Technology Corporation have introduced a derivative product for Bitcoin mining on Bitnomial’s US derivatives exchange.
The debut of Hashrate Futures, a derivative futures contract for trading the processing power of the Bitcoin blockchain, was announced by Bitnomial on May 28.
According to Bitnomial, the instrument, which is traded under the ticker HUP, exposes investors to the Bitcoin mining hash rate and allows miners to hedge their revenue.
Two parties agree to buy and sell a financial asset at a future date for a predetermined price in a futures contract, which is a financial derivative.
This commodity is priced based on Luxor’s calculation of the prospective revenue from Bitcoin mining, known as “hashprice,” and trades hash rate, or Bitcoin’s computational power.
Hashrate Futures contracts use Luxor’s Bitcoin Hashprice Index as the reference rate for settlement and have 1 petahash (PH) size for monthly durations.
Additionally, Luxor provides non-deliverable Hashrate Forwards, which are over-the-counter goods that settle off an exchange that is under CMEA regulation.
Hashrate Futures are fungible with the company’s actual Bitcoin Futures, according to Bitnomial founder and CEO Luke Hoersten, “enabling Hashrate” to Bitcoin Futures spreads. Furthermore, he said:
“These spreads allow participants to take returns in either USD or BTC, or isolate hash rate risk from Bitcoin price risk,”
Luxor came up with the word “hashprice,” which describes the anticipated value of one TH/s of hashing power every day. It calculates the expected earnings of a miner for a given amount of hash rate.
In April, the US Securities and Exchange Commission (SEC) filed a lawsuit against the co-founders of Geosyn Mining for allegedly misleading investors, which led to a $5.6 million loss. SEC has asked for fines to be imposed on its founders, reimbursement of the purported misappropriation, and a permanent injunction.
