The new product will be based on “hashprice,” a term coined by Luxor to refer to the revenue miners earn from a unit of hashrate.Read MoreCoinDesk
Crypto software and services company Luxor is launching a new product for investors and companies to lock in profits using bitcoin mining derivatives.
The product, called Luxor Hashprice NDF, will be traded over-the-counter and will be first of its kind, according to a statement. The financial instrument will be based on hashprice, a term coined by Luxor that refers to the bitcoin mining revenue miners earn from a unit of hashrate, or compute power over a specific period of time.
With the bear market wreaking havoc on the bitcoin mining industry, participants exposed to the sector require new ways of hedging their downside. Traditionally, derivative products have been used in the traditional finance (TradFi) world to protect against market downturns.
“Hashprice-based derivatives such as the Luxor Hashprice NDF forward contract will usher in a new era of financial instruments for bitcoin miners and give them a much-needed tool to hedge their mining operations,” the statement said. It will also help investment firms such as prop traders and hedge funds gain exposure to the mining industry, the statement added.
The contracts for the product will settle in U.S. dollars, with Luxor providing buyers and sellers of the derivatives the option to reconcile them in bitcoin or U.S. dollar equivalents. Luxor will facilitate the order matchmaking and settlement process, while making the contract durations flexible based on customer needs.
With the bear market being a good opportunity for some to build, some industry participants have taken the plunge to deploy capital or introduce ways to help the struggling mining sector. Most recently, crypto asset management firm Grayscale said it is forming an investment vehicle that will help investors take advantage of the low prices of bitcoin mining infrastructure amid the ongoing crypto winter. Grayscale is a CoinDesk sister company.
Meanwhile, last month, crypto billionaire Jihan Wu – the founder of Bitmain – was reported to be setting up a $250 million fund to purchase distressed assets from mining firms.
DISCLOSURE
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
After a flash crash to $89,256 earlier this month, Bitcoin (BTC) made a swift recovery,…
President Donald Trump has signed a Executive Order titled “Strengthening American Leadership in Digital Financial…
Although Bitcoin price action is still holding above the $100,000 price level, the past 24…
Bitcoin continues to trade at record levels. According to checkonchain data, Wednesday's $130 billion bitcoin…
Bitcoin (BTC) surged past $106,000 on Thursday morning in the U.S. on reports that U.S.…
BlackRock, one of the biggest investment companies in the world, has given crypto enthusiasts a…