Luxor and Bitnomial Launch Bitcoin Mining Derivatives
Bitcoin (BTC) mining companies Luxor Technology Corporation and Bitnomial Inc. have launched Bitcoin mining derivatives on Bitnomial’s US derivatives exchange.
On May 28, Bitnomial announced the launch of Hashrate Futures, a derivative futures contract for trading computing power on the Bitcoin blockchain.
Bitnomial claims that the product, which trades under the name HUP, provides a way for miners to hedge their returns and for investors to gain exposure to the Bitcoin mining hash rate.
A futures contract is a derivative financial instrument in which two parties agree to buy or sell a financial asset at an agreed upon price in the future.
The product trades Bitcoin’s computing power, the hash rate, and is priced based on the “hash price,” Luxor’s measure of Bitcoin mining profit potential.
Hashrate futures contracts have a size of 1 Petahash (PH) per month and use Luxor’s Bitcoin Hash Price Index as the reference rate for settlement.
Luxor also offers Non-Deliverable Hashrate Forwards, which are over-the-counter products and are not settled on exchanges regulated by the Commodity Futures Trading Commission.
Bitnomial founder and CEO Luke Hoersten explained that Hashrate Futures are fungible with the company’s actual Bitcoin Futures, “enabling Hashrate to Bitcoin Futures spreads.”
“These spreads allow participants to earn returns in USD or BTC or to separate hash rate risk from Bitcoin price risk,” he added.
Related: Bitcoin mining revenue hits annual low since halving.
Hashprice is a term created by Luxor that refers to the expected value of hash power of 1TH/s per day. This quantifies how much profit a miner can make from a certain hashrate quantity.
According to HashRateIndex, the current hash price is $0.053 per terahash per day.
It soared to $0.140 during the halving event on April 20, but then plummeted as block rewards were halved.
Hash prices have fallen 46% since the beginning of 2024, making it more difficult for miners to generate revenue from proof-of-work activities.
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