Head of Content and Research
7 February 2023
Seattle, WA - February 8, 2023 – Luxor Technologies and Digital Power Optimization (DPO) have executed a trade for the first bitcoin-denominated hashprice non-deliverable forward (NDF). The hashrate derivative provides DPO with a successful hedge against an increase in Bitcoin’s mining difficulty while also serving as a significant trading milestone for Luxor’s Derivatives Desk.
Luxor started offering the BTC-denominated hashprice NDF in January after launching its USD-denominated hashprice NDFs in October of last year. These derivatives allow miners to lock in future hashrate revenue at an agreed-upon price and give buyers synthetic exposure to hashrate.
"Luxor's NDF product is a perfect fit for our energy clients. These renewable power companies are focused on reducing risk, not betting on BTC appreciation. Locking in the value of their hashrate in advance provides consistent, predictable revenues, much like traditional forward sales of power. Luxor's market leadership in creating hedging solutions denominated in both BTC and USD will allow DPO's clients to invest more heavily, with less risk, in building out the next generation of bitcoin mining facilities,” Digital Power Optimization Co-founder and COO Alex Stoewer said.
Digital Power Optimization provides load balancing solutions for stranded and under-utilized renewable energy, like with its behind-the-meter hydro-powered mining facility in Wisconsin. DPO is using Luxor’s BTC-denominated hashprice NDF to hedge rises to Bitcoin’s mining difficulty, which negatively affect Bitcoin mining profitability. Thanks to the trade, DPO was able to capture upside despite rising difficulty.
“Here at Luxor, we view hashrate as a commodity and bitcoin miners as commodity producers. The Luxor Derivatives team feels these miners should have access to the same suite of financial products to optimize their operations that producers of other commodities have, and this BTC-denominated NDF is another addition to our growing suite of financial products,” Luxor Head of Derivatives Matt Williams said.
Luxor Technology Corporation is a mining software and services company that offers a suite of products catered toward the mining and compute power industry. Luxor operates a global Bitcoin Mining Pool, Hashrate Derivatives, ASIC Trading Desk and Bitcoin mining data platform Hashrate Index. If you are interested in contacting the Luxor Pool team, please email [email protected]
Digital Power-Optimization Inc. is a leading energy services provider which utilizes cryptocurrency mining as a tool to help power producers maximize the value of their energy. DPO offers a unique and proprietary Cryptocurrency Mining as a Service (CMaaS) strategy and structure, which aligns its interests with the interests of its partners. DPO is privately held. For more information on DPO, please visit www.digitalpoweroptimization.com.
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