SynFutures launches DeFi futures to hedge Bitcoin mining risks

    26 Jul 2021

    Decentralized derivatives exchange SynFutures launched the DeFi futures, letting miners hedging against Bitcoin mining difficulty and all the factors affecting their mining returns.

    SynFutures announced a new product called Bitcoin Hash Rate Futures that uses the mining difficulty of Bitcoin as a basis to open long or short positions. The new offering is described as fully decentralized hash rate futures and would let users trade on Bitcoin mining difficulty with Wrapped BTC (wBTC).

    The mining difficulty and hash rate are two basic ever-changing mechanics of Bitcoin. The Bitcoin network requires mining difficulty to readjust in every 2,016 blocks to count the Bitcoin hash rate — the amount of total computing power dedicated to mining. It depends on the number of miners online, which is affected by multiple factors and events, such as the miners’ exodus during China’s crackdown.

    In general, this bilateral mechanism maintains a constant block time, which means how long it takes to find each new block while operating blockchain.

    Now, SynFutures launched the Hash Rate Futures in closed alpha. According to the announcement, SynFutures uses a designed procedure to validate Bitcoin block headers directly and evaluate the mining difficulty. Each futures contract represents the expected block mining reward in BTC for a difficulty resetting period at a given difficulty level.

    With this product, miners will be able to short the Hash Rate Futures to hedge against the risk of mining difficulty increases or long electricity futures to determine the power cost.

    Rachel Lin, SynFutures founder and CEO, said that the team wanted to let traders hedge against all the factors affecting their mining returns.

    “There hasn’t been a derivatives product targeting mining difficulty, which is vital to a miner knowing how much return their rigs are going to generate. With Hash Rate Futures, we’re filling in this gap for miners,” she added.

    As reported before, mining becomes more profitable worldwide, as China’s crypto crackdown led to a significant Bitcoin hash rate drop.

    Leave a Reply

    Your email address will not be published. Required fields are marked *