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Author: Admin | 2025-04-27
At the average mid-market price in August or September, they could have mined 17% and 12% more bitcoin than those miners which mined at spot prices through January. Those who fully hedged in October, November, and December produced 11%, 3%, and 1% more bitcoin versus spot miners. In BTC terms, it was best to sell early, or conversely, buy late. The table below summarizes how a 1 EH mining operation’s total Bitcoin production would have performed, had it sold January 2025 hashrate forward versus mining spot during the month.1EH BTC Hedging Scenario | January 2025The best strategy for miners in January was to hedge network difficulty and transaction fees by selling in the BTC denominated hashrate market and maintaining their long exposure to Bitcoin. For those who employed this strategy, it proved successful.Most public mining companies did not hedge network difficulty and transaction fees in January 2025. The figure below illustrates a hypothetical scenario of how public miners' January Bitcoin production would have differed if they had fully hedged their production back in August. Note: this figure is strictly for demonstration purposes and based on the simplifying assumption of multiplying actual production figures by the percentage difference between hashrate forward contracts’ locked-in hashprice versus spot hashprice; it excludes fees and bid/ask spreads associated with entering into hashrate forward contracts.A second caveat: although selling forward proved to be favorable in this instance, it is critical to recognize that hedging is typically a cost of business rather than a revenue generation method. Hedgers willingly pay a price to buy certainty and obtain more predictable cash flows, which increases valuation, reduces cost of capital, and ultimately attracts investments.How Future Hashrate Traded in January 2025The two tables below summarize the evolution of Bitcoin hashrate forward markets during January 2025, for the subsequent five months from February 2025 through June 2025. Rows represent specific monthly hashrate contracts, while columns represent specific trading days. Cell values indicate the average daily mid-market price, except for spot prices.USD Hashrate Forward Contracts Evolution | January 2025BTC Hashrate Forward Contracts Evolution | January 2025During January trading, both USD and BTC curves traded mostly in backwardation. USD denominated contracts fell over the first half of the month, rose during the third week, and fell back down slightly throughout the fourth week. In contrast, BTC denominated forward hashrate contract pricing was essentially flat. Given this information, we can use the two contracts (by dividing USD contract values with BTC contract values) to back out implied Bitcoin price expectations expressed by the market:Implied BTC Price From Hashrate Forward Markets | January 2025Like USD hashprice, implied future Bitcoin price expectations fell in the first half of the month, rose during the third week, and fell back down throughout the fourth week. However, implied future Bitcoin prices were in contango. Combining this information with USD-denominated hashrate contracts being in backwardation allows us to infer the market’s expectation around network difficulty and hashrate: namely that both are expected to grow faster than Bitcoin price and transaction
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