On December 20, it has been reported that the partnership aims to provide risk management solutions for Bitcoin miners on Canaan’s network by allowing them to protect against losses and earn a yield on inventory.
However, GSR will offer a customized suite of products consisting of swaps, collars, and more bespoke structured instruments from January 2020. These will provide a hedge against volatile factors such as Bitcoin price, mining difficulty, and electricity and equipment costs.
Cristian Gil, the Co-Founder of GSR, explained:
“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.”
In traditional markets, the majority of corporate players have hedging programs. With $3 billion set to be mined in 2020 at current prices, the hedging market is small compared to physical commodities markets.
However, as portfolio sizes increase and capital expenditure grow, it makes sense to consider hedging options as resources become available.
Thus, Cora Jiang, the Global Marketing Director of Interhash, added:
“We believe risk management will play an integral role in this industry as it matures. We are proud to partner with GSR who have substantial financial expertise in this area and a proven track record in crypto finance.”
Source: businesswire.com | cointelegraph.com