Cryptocurrency
Bitcoin miners could soon hedge their risks as Interhash and GSR are set to launch derivatives
As reported by The Block, “Bitcoin miners could soon protect themselves against volatility in bitcoin prices with derivative products. “Cryptocurrency market maker GSR and Canaan Creative strategic partner Interhash have tied up to launch derivatives for bitcoin miners. “The companies are preparing to launch customized structured products, including swaps, to allow bitcoin miners to protect themselves […]
As reported by The Block, “Bitcoin miners could soon protect themselves against volatility in bitcoin prices with derivative products.
“Cryptocurrency market maker GSR and Canaan Creative strategic partner Interhash have tied up to launch derivatives for bitcoin miners.
“The companies are preparing to launch customized structured products, including swaps, to allow bitcoin miners to protect themselves against losses and earn returns on their inventory.
“Cristian Gil, co-founder of GSR, said that bitcoin miners are currently either ‘under-hedged or outright un-hedged against adverse price action.’ He added that the unpredictability of their business models warrants better ways of hedging risks.
“Some $3 billion worth of bitcoin is expected to be mined globally next year at current prices, according to GSR. While the firm did not provide a specific date for the launch of new derivatives, it said miners can expect these next month.
“Richard Rosenblum, co-founder of GSR, said the cryptocurrency market still lacks hedging instruments for miners. ‘The market for hedging is small when compared to physical commodities markets, however it is compelling for a variety of reasons,’ he said, adding:
“’Unlike traditional commodities, digital commodities are experiencing rapid growth. Plus, given Bitcoin’s ‘constant supply’ dynamics and other unique characteristics, new products are required to properly deliver quality risk management solutions to miners.’
“At present, Chinese bitcoin miners control 65% of the cryptocurrency network’s processing power (hash rate), according to research by digital assets manager CoinShares. The new derivative offerings could help them better manage their risks…”