Digital asset market maker GSR on Thursday announced its partnership with Canaan Creative-backed Interhash to introduce crypto derivatives as risk management products for crypto miners.
Per the official press release, the derivatives products will include swaps, collars, and other structured products and will be launched at the beginning of next month. The company believes that the products will allow miners to protect themselves against losses and earn an extra yield on inventory.
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The company is going to categorize its products into two types – an average-priced options or swap contracts for mining risk management and a futures contract that will trade based on hashrate.
The second product, however, is still under development with no tentative launch date, according to Rich Rosenblum, co-founder of GSR.
The products will be only available to the digital asset mining network of Cannan.
Tapping a major industry with derivatives
Mentioning the upcoming products, Cristian Gil, co-founder of GSR, said: “The cryptocurrency industry is more volatile than any other business area, and many participants in the ecosystem are under-hedged or outright un-hedged against adverse price action. Miners are a foundational component of the digital asset space, and have to consider many volatile factors when planning their future revenue streams.”
The crypto mining industry evolved tremendously over the years – once Bitcoin could be mined using a laptop, however, now high-end ASICs are needed to register profits. Moreover, the involvement of big players in the business also made it tough for small miners to survive in the industry.
According to GSR, around $3 billion worth of Bitcoin will be mined next year.
“The cost of mining equipment and electricity are constantly in flux. Miners must also consider the asset’s mining difficulty and price. The unpredictability of their business models is unprecedented, so it is natural that this segment of the market is exploring ways to better hedge their risk. We are pleased to help build customizable risk management solutions alongside Interhash, who are global leaders in the industry,” Gil added.