The decentralized derivatives exchange SynFutures announced a new product called Bitcoin (BTC) Hash Rate Futures, which uses the ever-changing mining difficulty of the largest cryptocurrency as a basis to open long or short positions.
SynFutures’ new offering, touted as fully decentralized hash rate futures, would allow users to trade on difficulties in mining Bitcoin with packaged BTC (WBTC).
Hash rate and mining difficulty are two core mechanisms of Bitcoin that became even more popular with the exodus of miners following China’s raid. The Bitcoin network requires the mining difficulty to be readjusted every 2,016 blocks to counteract the Bitcoin hash rate – the amount of computing power devoted to mining.
As explained in detail by Cointelegraph, this two-way mechanism maintains a constant block time, or how long it takes to find each new block when mining bitcoin.
According to the announcement, SynFutures developed the hash rate futures, which are now in closed alpha, by designing an oracle to validate bitcoin block headers directly and extract the mining difficulty. Each futures contract represents the expected block mining reward in BTC for a period of time to reset the difficulty to a certain difficulty level.
Miners could short hash rate futures to hedge against the risk of mining difficulties increasing, or long power futures to determine electricity costs.
Related: How To Mine Bitcoin: All You Need To Know
Rachel Lin, founder and CEO of SynFutures, said the team wants to enable traders to hedge against any factors that affect their mining earnings. She added:
“There was no derivative product targeting mining difficulties, which is important for a miner to know how much return their drilling rigs will generate. With Hash Rate Futures we fill this gap for miners. “
Last month, SynFutures closed a Series A funding round of $ 14 million, led by Polychain Capital, with the participation of a variety of prominent crypto investors including Pantera Capital, Framework and Wintermute.