Luxor Technologies launch Bitcoin mining derivatives in the U.S.

Luxor Technology Corporation and Bitnomial, Inc. have launched Hashrate Futures on Bitnomial’s US-based derivatives exchange. This is the first Bitcoin mining derivative product to trade on a regulated exchange. 

Per the May 28 announcement, the product aims to offer increased liquidity, greater market transparency, and reduced counterparty risk.

First regulated Bitcoin mining derivative

These Hashrate Futures provide miners with a tool to hedge their revenue. Investors gain access to a derivative directly tied to Bitcoin mining hashrate. 

The contracts trade under the ticker $HUP with a size of 1 petahash (PH) for monthly durations. Luxor’s Bitcoin Hashprice Index is used for settlement by tracking the value of hashrate.

Matt Williams, Luxor’s Head of Derivatives, explained: 

These contracts offer market participants the first fully-regulated Bitcoin mining derivative.

He also noted their potential for increasing transparency, security, and liquidity in Bitcoin mining.

Anyone with a Futures Commission Merchant (FCM) account connected to the Bitnomial exchange can access the Hashrate Futures. Luxor has also established an Introducing Broker (IB) business to assist firms with onboarding to these FCMs.

Expanding derivatives market

Luke Hoersten, Founder and CEO of Bitnomial, mentioned the demand from the mining community for a futures product. He stated: 

Hashrate Futures provide bitcoin miners and institutional investors a new method of hedging that has never before been available, as demand for new crypto-based derivatives products continues to grow.

These futures are fungible with Bitnomial’s physical Bitcoin Futures, allowing spreads that enable participants to take returns in USD or BTC or isolate hashrate risk from Bitcoin price risk.

Bitnomial’s Bitcoin Complex now includes Bitcoin Futures, Options, Deci Futures, and Hashrate Futures. These contracts create a comprehensive Bitcoin derivatives complex in the US market. 

Bitnomial is unique in offering physically-backed contracts, allowing redemption for Bitcoin instead of fiat.

According to exchange data, Bitnomial Bitcoin Futures volumes and open interest reached all-time highs during Q1 2024. This indicates a growing interest in physically-backed Bitcoin financial products.

Meanwhile, last year, Luxor partnered with Volcano Energy to launch a Bitcoin mining operation in El Salvador. The partnership aims to leverage the country’s geothermal energy for sustainable Bitcoin mining.

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