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Issue #890: More hashrate derivatives coming to market

Issue #890: More hashrate derivatives coming to market

Dec 17, 2020
Marty's Ƀent

Issue #890: More hashrate derivatives coming to market

As Bitcoin was surpassing its all time high in price yesterday, the network was also celebrating a very important milestone; the 10th anniversary of the first block mined by Slush Pool, the first mining pool to come to market. A momentous event that kick started a new way for individual miners to receive more consistent BTC payouts to eliminate the stress of paying electricity bills and reinvesting in operations. In the decade since Slush Pool was launched, the mining pool landscape has proven to be one of the most ruthlessly competitive landscapes within the industry that has been erected around the Bitcoin network.

btc magazine slush pool
via Bitcoin Magazine + Slush Pool

The competition has gotten so fierce that the core competency of mining pools is shifting from aggregating hashrate and distributing block rewards to clients to a fully integrated stack of services for miners and outside investors who would like to gain exposure to Bitcoin, and bitcoin mining more specifically. The emerging stack of services that are being built by pools consist of lower to no fees for bigger miners, firmware that allows miners to get more hash for their buck out certain miner models, and hashrate derivatives that allow miners to hedge operational risks.

What got buried in the madness around yesterday's price action and the headline in the Bitcoin Magazine article about Slush Pool's 10th anniversary is the fact that Slush Pool plans on launching a hashrate spot and forwards market in early 2021. With plans of adding futures products at some point in the future. Offering forwards and futures markets to miners and investors who would like to gain exposure to the market this way. On top of this, Slush Pool/Braiins is going to push Stratum V2, the mining pool protocol that allows individual miners to construct their own block templates, as an option for their clients on the mining side AS WELL as their clients on the buy side of the derivatives markets they plan to launch. If I understood the article correctly, this means the buy side will have the ability to choose blocktemplates as well as the individual miners. I'm not sure how the mechanics of that will actually work, but, if true, this would help to further decentralize mining pools and decrease Bitcoin's attack surface.

I look forward to learning more about these products and how users on both sides of the market can utilize them. The future is very bright! Onward!

Final thought...

Thursdays are very busy these days.


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