– An upcoming Bitcoin (BTC) hashrate-backed product by Luxor Technology is refuting claims that it is similar to failed products by BlockFi or Celsius. Luxor’s product relies on proof-of-work for returns, not ponzi schemes.
– The legitimacy of Luxor’s hashrate-backed product was discussed in a podcast by What Bitcoin Did. Concerns were expressed about the worst-case scenario for the product.
– Luxor’s Head of Derivatives, Matt Williams, explained that their hashrate-backed product is different because it is backed by economic production. The return comes from miners giving up a portion of their margin to investors who finance their operation.
– Luxor’s product allows investors to receive loan repayments by posting Bitcoin as collateral. The returns are generated through the purchase and sale of hashrate. Luxor estimates returns of 10% to 13%.
– Williams emphasized that miners have better access to capital with this product, as they don’t have to sell their mined BTC to fund operations.
– Luxor acts as an intermediary between investors and mining firms and only holds Bitcoin for a short period of time during transactions.
– Joe Kelly, CEO of Bitcoin lending firm Unchained, advises caution for those interested in making a return on their Bitcoin and warns about the nascent nature of the lending and borrowing markets.
– Luxor’s hashrate-backed product is subject to due diligence checks and is not available to everyone.
– Luxor aims to work with reputable miners and may require them to post insurance to mitigate counterparty risk.
– The availability date of Luxor’s hashrate-backed product has not been disclosed.