How Bitcoin Miners Are Using Hashrate Markets

Hashrate markets expanded rapidly in 2024. OTC volumes on Luxor’s hashrate forward market jumped over 500%, and Bitnomial became the first regulated exchange to offer bitcoin mining derivatives by launching hashrate futures. As volumes have grown, Bitcoin miners have deployed increasingly sophisticated hashrate market strategies.

In this post, we’ll break down the strategies miners are using for achieving three key goals: managing revenue risk, financing operations, and boosting mining rewards.

Goal #1: Managing Revenue Risk

Bitcoin miners face a myriad of unpredictable variables. Hashprice, which determines how much revenue a Bitcoin miner earns, can be affected by swings in Bitcoin price action, changes in network difficulty (i.e., network hashrate) or the amount of transaction fees being collected. 

To hedge against revenue fluctuations, miners can sell their hashrate in the forward market, instead of the spot hashrate market or typical mining pool. A forward sale will lock in a fixed hashprice and revenue for the miner, enabling certainty in earnings per unit of hashrate throughout the duration of the contract.

Miners can get revenue certainty either by selling the USD or BTC-denominated non-deliverable hashrate forward (NDF) contract in Luxor’s OTC market, or by selling USD-denominated hashrate futures on Binomial Exchange. Selling a USD contract enables certainty in fiat currency revenues, offsetting fluctuations in Bitcoin price, network difficulty and transaction fees. On the other hand, selling a BTC contract locks in total BTC production, hedging against fluctuations in network difficulty and transaction fees, but maintaining upside exposure to Bitcoin price.

Goal #2: Financing Operations

Scaling a Bitcoin mining operation requires capital, and miners are increasingly leveraging hashrate-backed financing to fund expansions. Instead of selling Bitcoin in treasury, or raising traditional debt or equity financing, miners are increasingly securing financing using future hashrate.

When a miner sells forward their hashrate for financing, there are two primary payback structures:

Fixed Hashrate Repayment – in return for upfront financing, miners commit a portion of their future hashrate for a set period. This structure aligns payments with mining performance, reducing financial strain if hashprice drops. Fixed hashrate repayment can be achieved by a sale of the deliverable forward (DF) contract in Luxor’s OTC market. 

Fixed Bitcoin Repayment – in return for upfront financing, miners repay a predetermined amount of BTC over time. This option carries more risk around hashprice action but offers predictable debt obligations. Fixed Bitcoin Repayment can be achieved by a forward sale of the deliverable forward (DF) paired with a buy of the non-deliverable forward (NDF) contract.

Both models enable miners to scale efficiently without immediate capital outlays. In a capital-intensive industry such as Bitcoin mining, hashrate-backed financing is becoming a game-changer for fleet expansion as miners can now finance ASIC purchases and obtain hashprice protection using their existing hashrate.

Goal #3: Boosting Mining Rewards

Mining operators face challenges such as ASIC delivery delays, electrical issues, high power costs, and infrastructure bottlenecks—factors that can stall hashrate production and reduce Bitcoin rewards. Buying hashrate forward contracts helps operators quickly boost their managed hashrate and secure future mining rewards.

On Luxor’s OTC market, buying the deliverable forward gives miners access to a fixed amount of hashrate over a predetermined duration, for a pre-agreed price (payable in USD or BTC). The hashrate and resulting mining rewards are delivered to your Luxor Pool account, with payouts as frequent as daily.

Compared to DFs, Luxor’s OTC non-deliverable forwards (NDFs) and Bitnomial’s hashrate futures require less upfront capital, making them more flexible for margin-based trading—though at a higher hashprice. DFs typically trade at a discount because they require full upfront payment but offer the lowest possible hashprice.

Miners seeking a fixed return can earn yield on Bitcoin by pairing an NDF buy with a forward NDF sale. This strategy locks in the spread between contracts, providing a downside-protected return, albeit with capped upside potential.

Conclusion

With institutional adoption of hashrate markets continuing into 2025, miners seeking to stay ahead should understand that monitoring and participating in the forward market isn’t just a smart move — it’s essential. Miners can seamlessly buy hashrate for immediate growth or sell forward for financing and fleet expansion. As the only Bitcoin mining pool with forward market functionality extending up to 12 months, Luxor miners trade in the most liquid forward hashrate marketplace, all while enjoying the benefits of netted margin requirements.

If you’d like to learn more about Luxor’s Bitcoin mining derivatives, please reach out to [email protected] or visit https://www.luxor.tech/derivatives.

Disclaimer

This content is for informational purposes only, you should not construe any such information or other material as legal, investment, financial, or other advice. Nothing contained in our content constitutes a solicitation, recommendation, endorsement, or offer by Luxor or any of Luxor’s employees to buy or sell any derivatives or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the derivatives laws of such jurisdiction.

There are risks associated with trading derivatives. Trading in derivatives involves risk of loss, loss of principal is possible.