Luxor Technology and Bitnomial launched the first fully regulated Bitcoin mining derivative for trading in the US on May 28.
The new product – dubbed Bitcoin hashrate futures — aims to increase liquidity and transparency while reducing counterparty risk for market participants.
Hashrate Futures, trading under the ticker $HUP, allows miners to hedge their earnings and offers investors a new way to access the Bitcoin mining market.
Each contract represents 1 petahash (PH) and has a monthly term. The settlement uses Luxor’s Bitcoin Hashprice Index, which tracks the value of hashrate, a digital commodity at the heart of the contracts.
Matt Williams, head of derivatives at Luxor, said:
“Hashrate Futures are the pinnacle of hedging products for Bitcoin mining. These contracts, the first fully regulated Bitcoin mining derivative, will usher in a new era of hashrate trading that is more transparent, secure and liquid.”
Luxor and Bitnomial designed the product with accessibility in mind, allowing anyone with a Futures Commission Merchant (FCM) account connected to the Bitnomial exchange to trade the product.
Luxor has also established an Introducing Broker (IB) company to help companies transition to these FCMs. Hashrate Futures complement Luxor’s suite of financial hashrate 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 futures product that is fungible 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 crypto-based derivatives.”
Bitnomial’s unique position in the Bitcoin derivatives market offers physically backed contracts, allowing traders to exchange them for Bitcoin instead of fiat.
Exchange data shows that Bitnomial Bitcoin Futures volumes and open interest reached record highs in the first quarter of 2024, reflecting growing interest in physically backed Bitcoin financial products.
The addition of Hashrate Futures enhances Bitnomial’s extensive Bitcoin derivatives complex, which includes Bitcoin Futures, Options, Deci Futures and now Hashrate Futures. This complex offers various tools for managing risks and investing in the Bitcoin market.