Regulation
The first Bitcoin mining derivative product is published on a regulated US exchange
Luxor technology and Bitnomial launched the first fully regulated service Bitcoin mining derivative product for trading in the United States on May 28.
The new product — nicknamed Bitcoin hash rate futures — aims to increase liquidity and transparency while reducing counterparty risk for market participants.
Hashrate Futures, trading under the ticker $HUP, allow miners to hedge their revenue and offer investors a new way to access the Bitcoin mining market.
Each contract represents 1 petahash (PH) and has a monthly duration. The settlement uses Luxor’s Bitcoin Hashprice Index, which tracks the value of hashrate, a central digital commodity in contracts.
Luxor’s head of derivatives, Matt Williams, said:
“Hashrate Futures are the pinnacle of Bitcoin mining hedging products. These contracts, the first fully regulated Bitcoin mining derivative, will usher in a new era of hashrate trading that will be more transparent, secure and liquid.”
Luxor and Bitnomial designed the product for accessibility, allowing anyone with a Futures Commission Merchant (FCM) account connected to the Bitnomial exchange to trade the product.
Luxor has also created an Introducing Broker (IB) business to help companies enter these FCMs. Hashrate Futures complement Luxor’s suite of hashrate financial products, including physically delivered and non-deliverable Hashrate Forwards.
Bitnomial founder and CEO Luke Hoersten said:
“The mining community has shown unprecedented demand for a fungible futures product with Luxor’s spot and forward offerings. Hashrate Futures provide a new hedging method for Bitcoin miners and institutional investors, meeting the growing demand for cryptocurrency-based derivatives.”
Bitnomial’s unique position in the Bitcoin derivatives market offers physically backed contracts, allowing traders to redeem them into Bitcoin instead of fiat currency.
Exchange data indicates that Bitnomial Bitcoin Futures volumes and open interest reached all-time highs in the first quarter of 2024, reflecting growing interest in physically-backed Bitcoin financial products.
The addition of Hashrate Futures enhances Bitnomial’s comprehensive Bitcoin derivatives complex, which includes Bitcoin Futures, Options, Deci Futures and now Hashrate Futures. This complex offers several tools for risk management and investments in the Bitcoin market.