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Luxor Technology Corporation, a blockchain infrastructure service provider, has unveiled plans to introduce exchange-traded hashrate futures for institutional investors in the U.S. Through a collaboration with derivatives exchange Bitnomial, this new futures product is slated to be accessible on the trading platform by the end of this month.
Luxor and Bitnomial’s Partnership Introduces Exchange-Traded Hashrate Futures
According to a recent announcement, Luxor and Bitnomial are joining forces to offer exchange-traded hashrate futures tailored for institutional investors. Set to debut on Bitnomial’s derivatives trading platform by the close of March, Luxor emphasized that this financial instrument will equip miners with a means to hedge future income while offering investors an opportunity to engage with hashrate futures on an American exchange.
At the heart of the hashrate futures product lies Luxor’s Bitcoin Hashprice Index, a benchmark that gauges the value of 1 petahash per second (PH/s) of SHA256 hashpower. Essentially, the hashprice represents the daily anticipated value of 1 PH/s of hashing power, quantified in U.S. dollars. Currently, the hashprice per PH/s stands just below $100, precisely at $99.70 on March 19, 2024, at 10:00 a.m. Eastern Time.
It’s worth noting that the hashprice of Bitcoin, as determined by the seven-day simple moving average (SMA), can experience significant fluctuations over time. “Hashrate has one of the highest volatilities of major commodities, and the April 2024 Bitcoin Halving will exacerbate this volatility,” Luxor’s head of derivatives, Matt Williams, remarked on Tuesday. “Bitcoin miners need additional methods to mitigate this price risk to ensure the longevity of their businesses.”
Williams continued:
Exchange-traded hashrate futures will allow them to quickly move in and out of hedging positions to de-risk their revenue streams, and the revenue certainty should improve their credit profile with lenders, which will lower their cost of securing capital.
Presently, according to Luxor’s network data, Bitcoin’s hashrate is coasting along at 600 exahash per second (EH/s) which is equivalent to 600,000 PH/s or 600,000,000 terahash per second (TH/s). The announcement from the partnership revealed that the contract would be accessible to individuals possessing a Futures Commission Merchant (FCM) account. Furthermore, Luxor is set to initiate an Introducing Broker (IB) enterprise aimed at onboarding firms in connecting with these FCMs.
What do you think about Luxor’s partnership with Bitnomial to launch an exchange-traded hashrate futures product? Share your thoughts and opinions about this subject in the comments section below.