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The decentralised Bitcoin Hash Rate Futures offered by SynFutures aim to allow miners to speculate on the difficulty of Bitcoin mining.
Exchange of decentralised derivatives SynFutures introduced Bitcoin (BTC) Hash Rate Futures, a new product that uses the largest cryptocurrency’s ever-changing mining difficulty as a basis for opening long or short positions.
SynFutures’ new offering, billed as fully decentralised hash rate futures, would allow users to trade on Bitcoin mining difficulty using Wrapped BTC (wBTC).
The hash rate and mining difficulty are two fundamental Bitcoin mechanics that have grown in popularity as a result of the exodus of miners following China’s crackdown. To counter the Bitcoin hash rate — the amount of computing power dedicated to mining — the Bitcoin network requires mining difficulty to be readjusted every 2,016 blocks.
This two-way mechanism, as detailed by Cointelegraph, maintains a constant block time, or how long it takes to find each new block while mining Bitcoin.
According to the announcement, SynFutures created the Hash Rate Futures, which are now in closed alpha, by designing an oracle to directly validate Bitcoin block headers and extract the mining difficulty. Each futures contract represents the expected block mining reward in BTC for a given difficulty level and difficulty resetting period.
Miners would be able to short Hash Rate Futures to hedge against the risk of increasing mining difficulty, or long electricity futures to determine the power cost.
SynFutures founder and CEO Rachel Lin said that the team wanted to allow traders to hedge against all the factors affecting their mining returns. She added:
“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.”
SynFutures closed a $14 million Series A funding round led by Polychain Capital, with participation from a slew of notable crypto investors, including Pantera Capital, Framework, and Wintermute, last month.