Good afternoon. As our readers know by now, BitOoda has been very successful within the crypto mining space. We are able to offer a full suite of services that really focus on their needs in terms of spot execution (Tagomi), structuring and managing bespoke risk programs within their business in terms of BTC price as well as hashrate/difficulty through derivatives, and finally helping think through energy/electricity contracts and asset optimization.
As we have been constantly working to advance the current BitOoda BTC Difficulty Swap, we are working towards the next iteration of this structured product. We marketed our most recent difficulty trade back in late July, and settled these trades at Tagomi. As we listen to our mining clients intently, they expressed their desire to hedge not only their difficulty risk, but also their production price risk simultaneously, with a single counterparty. Therefore, we have developed the BitOoda BTC Mining Combination Swap.
This Mining Combination Swap has two legs of a trade in one structure:
- The first leg is the Linear BTC Difficulty Swap as it currently stands
- The second leg is a BTC Forward that expires physically at the coinciding expiration of the difficulty swap (i.e. D+1, D+2 etc.)
This morning we received live offers on the BTC Difficulty Swaps:
D + 1 (9/1/2019) @ 10.6 T
D + 2 (9/15/2019) @ 11.4 T
D + 3 (9/29/2019) @ 12.1 T
D + 4 (10/13/2019) @ 12.7 T
D + 5 (10/27/2019) @ 13.5 T
D + 6 (11/10/2019) @ 14.6 T
Tied to these BTC Difficulty offers are BIDS for the BTC Forward 5% below current spot prices (for example, spot = $9,500; BTC Forward = $9,025)
If a miner was to enter into the Mining Combination Swap, they could mitigate both price risk and difficulty risk at much lower margining rate than via listed futures. This specifically tailor structured product is where the value proposition lies for miners. Being able to lock in their future income using less capital than they would traditionally through and exchange or FCM can help their business’ grow and potentially raise capital from outside the crypto space and grow as more PE firms look to generate yield through more real-estate type investments.
As always, if you are looking to simply trade the BTC Difficulty Swap leg, the current offers are listed above. If you have any questions regarding the mechanics of these trades and the margining that it entails please reach out to email@example.com