New DeFi Futures To Provide Hedge Against Bitcoin Mining Difficulties

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Decentralized derivative exchange SynFutures has announced a new product called Bitcoin (BTC) Hash Rate Futures which uses cryptocurrency’s ever-changing higher mining difficulty as the basis for opening long or short positions.

Billed as a fully decentralized hash rate futures contract, SynFutures’ new offering would allow users to trade Bitcoin mining difficulty with Wrapped BTC (wBTC).

Hash rate and mining difficulty are two basic Bitcoin mechanisms that have become even more popular with the exodus of miners following the Chinese crackdown. The Bitcoin network requires mining difficulties to readjust every 2,016 blocks to counter the Bitcoin hash rate – the amount of computing power dedicated to mining.

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As explained in detail by TUSEN, this two-way mechanism maintains a constant block time, or how long it takes to find each new block while mining Bitcoin.

According to the announcement, SynFutures developed the Hash Rate Futures, now in closed alpha, by designing an oracle to directly validate Bitcoin block headers and extract mining difficulty. Each futures contract represents the expected reward of mining blocks in BTC for a period of difficulty resetting at a given difficulty level.

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Miners would be able to short sell hash rate futures to hedge against the risk of increased mining difficulties or long electricity futures to determine the cost of it. electricity.

Related: How To Mine Bitcoin: Everything You Need To Know

SynFutures Founder and CEO Rachel Lin said the team wanted to allow traders to hedge against all factors affecting their mining returns. She added:

“There hasn’t been a derivative targeting mining difficulty, which is vital for a miner knowing how much return their rigs will generate. With Hash Rate Futures, we fill this gap for minors.

Last month, SynFutures closed a $ 14 million Series A funding round led by Polychain Capital with the participation of a host of leading crypto investors, including Pantera Capital, Framework and Wintermute.

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