The collaboration intends to offer risk administration tools for Bitcoin miners on Canaan’s network, permitting them to safeguard against losses and generate profits on inventory.
GSR will provide a tailor made range of products that is made up of collars, swaps and other custom made assets from January 2020.
The products are expected to act as a hedge against crypto market volatility, Bitcoin in particular, in addition to mining difficulty, hardware and electricity expenses.
Cristian Gil, GSR Co-Founder, elaborated as follows:
“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 conventional markets, a vast majority of enterprises use hedging tactics. With $3 billion worth crypto to be mined in 2020, as per prevailing prices, the hedging market is insignificant with reference to physical commodities markets.
Nevertheless, as the size of holdings increase and capital expenses rise, it is logical to look at hedging alternatives as resources be made available. Cora Jiang, Global Marketing Director of Interhash, explained the importance of the partnership with GSR.
“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.”
Notably, mining rig manufacturer Canaan’s shares have declined 40% since it got listed after conducting an IPO in November.