Bitcoin

Luxor Technology, a Bitcoin mining firm, is making waves with a new <a href="https://ultramining.com/news/en/bitcoin-miners-set-for-a-tough-ride-as-2024-halving-nears-jp-morgan/" rel="noopener noreferrer nofollow">hash rate</a>-backed product projected to yield 10%-13% returns. The offering comes amidst a market that's been wary of such products due to the high-profile collapses of BlockFi and Celsius. However, Luxor is keen to differentiate itself, assuring that returns are rooted in proof-of-work from miners, not financial engineering akin to Ponzi schemes, according to <a href="https://cointelegraph.com/news/luxor-refutes-bitcoin-hashrate-product-mirrors-blockfi-celsius" rel="noopener noreferrer nofollow">cointelegraph</a>.&nbsp;
This assurance was made during an episode of the 'What Bitcoin Did' podcast, where concerns about Luxor's new product were addressed. Luxor’s head of derivatives, Matt Williams, emphasized the real economic activity underpinning their product, arguing that the returns are generated from miners surrendering a portion of their margins, which they could have earned through their mining operations, to investors financing them.
Investors engage with Luxor's product by posting Bitcoin as collateral. Luxor then loans these funds to miners. The returns are generated when <a href="https://ultramining.com/news/en/bitcoin-miners-set-for-a-tough-ride-as-2024-halving-nears-jp-morgan/" rel="noopener noreferrer nofollow">hash rate</a> is bought at a discount from <a href="https://ultramining.com/news/en/russias-bitcoin-gold-rush-mining-machine-influx-outpaces-rest-of-the-world/" rel="noopener noreferrer nofollow">Bitcoin miners</a> and sold at a higher price, with the mining rewards from the purchased hash rate eventually passed on to the investors.
Luxor is set to manage this process through a newly envisaged hash rate marketplace. Furthermore, Williams pointed out that such a structure provides miners with a more attractive capital access route. This is because they don't need to liquidate their <a href="https://ultramining.com/news/en/rising-mining-difficulty-squeezes-bitcoin-miners-sparks-accumulation-among-whales/" rel="noopener noreferrer nofollow">Bitcoin holdings</a> to finance operations, potentially offering a more economically viable option.
Critically, Luxor also highlighted that it operates purely as an intermediary in this arrangement. They briefly custody Bitcoin during the transfer of funds from investors to mining firms. Despite the innovative structure of the product, the company acknowledges the risks involved, given recent industry troubles. As a precaution, they plan to work only with reputable miners and are considering insurance mandates for added security.
Joe Kelly, CEO of Unchained, advises potential investors to exercise caution. He warns that the Bitcoin lending and borrowing markets are still very young, and without careful due diligence, investors could face risks similar to those seen with BlockFi and Celsius.
Williams stressed that Luxor's product will not be universally available, reserved only for those who pass thorough due diligence checks. Despite not disclosing a launch date, the company's message is clear: they believe in their product's ability to provide substantial returns through a transparent, work-based mechanism, setting a cautious yet optimistic tone for its future rollout.

Luxor Technology Pitches Innovative Bitcoin Mining Investment Product

Ultramining_Eng

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