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In a pioneering move, <a href="https://ultramining.com/news/en/luxor-innovates-with-extended-contracts-and-daily-settlements-for-enhanced-bitcoin-mining/">Luxor</a> Technology, a leader in bitcoin mining software and services, has collaborated with Bitnomial, a crypto derivatives company, to unveil the <a href="https://ultramining.com/news/en/pennsylvania-a-new-hub-for-cryptomining-ignites-environmental-concerns/">United States</a>' first-ever exchange-traded hashrate futures. This innovative financial product is designed to offer <a href="https://ultramining.com/news/en/russias-bitcoin-gold-rush-mining-machine-influx-outpaces-rest-of-the-world/">bitcoin miners</a> a crucial tool to hedge their revenue risks ahead of the anticipated Bitcoin <a href="https://ultramining.com/news/en/heat-waves-and-halving-bitcoin-miners-cash-in-amid-rising-prices/">halving</a> event in April 2024, according to <a href="https://www.coindesk.com/business/2024/03/19/luxor-looks-to-help-bitcoin-miners-hedge-halving-risk-with-new-hashrate-futures/">Coindesk</a>.&nbsp; 
Set to be cash-settled, these futures contracts won't necessitate the physical delivery of the underlying assets. Instead, they will be grounded on <a href="https://ultramining.com/news/en/bitcoins-rebound-above-30k-boosts-hashprice-a-4-leap-in-24-hours/">hashprice</a>, a concept developed by Luxor that quantifies the bitcoin mining revenue earned per unit of hashrate over a specified period. This move towards an exchange-based settlement, as opposed to over-the-counter (OTC) settlements, aims to inject enhanced liquidity, transparency, and reduced counterparty risks into the market for both parties involved. 
Hashrate, the measure of computational power in the Bitcoin network, is crucial for miners' revenue generation capabilities. A surge in hashrate signifies intensified competition among miners, which could decrease their potential rewards and, subsequently, their earnings. With the halving event set to slash the rewards for mining a block by half, the industry faces increased uncertainty regarding future revenues. This scenario is compounded as miners ramp up their computational resources, escalating the network's overall hashrate. 
Luxor’s Head of Derivatives, Matt Williams, highlighted the volatility of hashrate among major commodities, a situation expected to intensify with the upcoming halving. This partnership with Bitnomial and the launch of exchange-traded hashrate futures represent a strategic effort to equip miners with the necessary tools to navigate this volatility, ensuring the sustainability of their operations. 
The contracts, sized at one petahash (PH) and with monthly durations, will align with Luxor’s Bitcoin Hashprice Index for settlement. This integration complements Luxor's suite of hashrate-related offerings and marks a significant expansion of Bitnomial’s Bitcoin Product Complex. 
Bitnomial's standing as a derivatives clearing organization approved by the Commodity Futures Trading Commission (CFTC) underscores the regulatory endorsement and reliability of this new financial product. This development comes at a critical juncture for the mining industry, which, after enduring the trials of the recent crypto winter and witnessing the bankruptcy of several large entities, is in dire need of prudent management strategies. 
Despite the recent surge in <a href="https://ultramining.com/news/en/impending-bitcoin-halving-may-trigger-major-hashrate-decline-say-experts/">Bitcoin's price</a> to a new all-time high, investors have shown a preference for directly traded bitcoin ETFs over mining <a href="https://ultramining.com/news/en/crypto-mining-stocks-outshine-bitcoins-performance-in-2023/">stocks</a>, viewing them as a more secure investment. The introduction of hedging instruments like hashrate futures is crucial for enhancing miners' treasury management practices, potentially attracting investor interest back to the sector by offering a more stable and profitable operational model. 
Luxor and Bitnomial's hashrate futures aim to provide bitcoin miners with a hedge against the revenue volatility induced by hashrate fluctuations and the halving event, fostering a more resilient and financially stable mining industry.

Luxor and Bitnomial Introduce U.S.’s First Exchange-Traded Hashrate Futures for Bitcoin Miners

Ultramining_Eng

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