New DeFi futures to hedge against difficulties in Bitcoin mining

The decentralized derivatives exchange SynFutures has announced a new product called Bitcoin (BTC) Hash Rate Futures, which uses the ever-changing mining difficulty of the cryptocurrency as the basis for opening positions.

SynFutures’ new offering, billed as a fully decentralized hash rate futures contract, allows users to trade on Bitcoin mining difficulties with packaged BTC (WBTC).

Hash rate and mining difficulty are two core mechanisms of Bitcoin that became even more popular with the migration of miners following the Chinese approach. The Bitcoin network requires that the mining difficulty be adjusted every 2,016 blocks to counteract the Bitcoin hash rate – the amount of computing power devoted to mining.

As described 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 has developed hash rate futures, which are currently in the closed alpha phase, by developing an oracle to directly validate Bitcoin block headers and solve mining difficulties. Each futures contract represents the expected block mining reward in BTC during the difficulty reset phase of a certain difficulty level.

Miners will be able to short hash rate futures to hedge against increased mining difficulties or long futures electricity prices to determine electricity costs.

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

Rachel Lin, founder and CEO of SynFutures, says the team wants to enable traders to hedge against all factors that affect their mining profitability. She added:

“There is not yet an inferred product that targets mining difficulties, which is important for miners to know how much profit their rigs will generate. We fill this gap for miners with hash rate futures. “

Last month, SynFutures closed a $ 14 million Series A funding round led by Polychain Capital and involving a variety of prominent crypto investors including Pantera Capital, Framework and Wintermute.