Happy Friday. This week certainly seemed to fly by. This mornings piece will take us back to a deal we brokered what felt like ages ago. Back in late January, we executed a structured product we referred to as the “Hash-Power Weekly Extendable Contract”. This was a physically settled contract where an industrial miner sold off a portion of his GPU mining capacity (compute) to a fund to specifically mine the token GRIN. This deal sparked the idea here at BitOoda to construct a financially settled hedging tool for Difficulty Risk for miners. As many of our readers may remember, we originally traded the BTC Difficulty Swap in late April, and then had our first expiration of this Difficulty Swap at the beginning of last week. We aim to constantly improve upon the trading flow and settlement procedures of this product to cause less friction for this market. Shortly we will be able to offer longer duration contracts with farther settlement dates, as well as more size to trade this product.
While all of these exciting milestones have been reached over the last few months, we revisited the PHYSICAL Hash-Power contract, and have been working behind the scenes with our strategic partners to develop the pipelines to not only enter into these binding Hash-Power agreements, but also trust the data and have reliable counterparties to ensure you are getting the amount of Hash-Power you are paying for. Similar to the Difficulty Swap, we are working on standardizing the product specs and would love to hear any thoughts or input on this from our readers.
We feel this contract can give industrial miners the avenue to guarantee and lock in some, if not all, profits from their built out infrastructure, but may also give buy side funds looking to deploy capital the potential to average into a cost basis for their cryptocurrency and possible do so at a discount to spot.
Thanks in advance for any input and have a wonderful weekend!