Bitcoin Hashrate Can Make Investors Money Now: Here’s How

Just a day ago, Bitcoin mining difficulty passed the 35.61 trillion mark to set a new all-time high. Said slope was, notably, the largest spike since May 13, 2021. At the same time, the previous week, the mining hashrate also crossed 300 EH/s to create a new ATH.

Read more: Bitcoin Mining Difficulty Reaches New ATH: Biggest Spike Since May 2021

Source: CoinMarketCap

Now, according to reports, crypto mining services firm Luxor Technologies has started offering a one-of-a-kind product that will help institutional investors, hedge funds, and more. to bet on the earnings of bitcoin miners. The derivative offering – Luxor Hashprice NDF – will provide direct exposure to earnings, shielding them from other variables such as operational costs.

A new bitcoin mining product is in town

As such, revenue generated by Exahash from Bitcoin miners is in a persistent, long-term downward trend. In fact, the BTC-denominated reward has hovered around its all-time low of 4.06 BTC per PE per day. The same translates to revenues of $78,000 to $88,000 per pe per day in US dollars. Notably, the current lows are at the same level as those recorded in October 2020.

Read more: Bitcoin Hashrate crosses 300 EH/s to create a new ATH

The Luxor non-deliverable futures contract, on the other hand, is traded over-the-counter. It allows traders [contract buyers] to arbitrate the income that miners derive from a hashrate. On the other hand, it gives miners [contract sellers] a means of hedging their mining operations. More so, because they can make money by selling bets on future production or locking in their future production at a fixed price.

Elaborating on the same on a Twitter thread, Luxor noted,

In addition to giving miners much-needed coverage, this derivative will allow hedge funds, financial institutions, and other commercial firms to gain exposure to Bitcoin mining through the hash price without having to mine physical mining assets.

When the contract expires, both parties will settle the difference between the price set in the contract and the settlement value of the underlying commodity. Giving an example on how the product works, Luxor explained,

Miners with large reserves on their balance sheets typically use option contracts to manage the risks associated with fluctuating Bitcoin prices. As highlighted in several recent articles, miners are now forced to sell their HODLings to pay off their debt and cover other costs.

Also Read: Most Public Bitcoin Miners Have “Never” Made a Profit: Why?

Under such conditions, launching a new product might come to the rescue. Matthew Williams, Head of Derivatives at Luxor said,

“The derivative could become a major tool for miners as their Bitcoin holdings dwindle.”

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