GSR Introduces Derivative Products For Cryptocurrency Mining Companies To Hedge Risks
The cryptocurrency mining industry could soon start to hedge risks by using derivative products. GSR, a global leader in digital asset trading announced in a press release on December 20, that they are partnering with the crypto mining giant Canaan to bring professional risk management and execution services to Canaan’s mining network.
GSR and Canaan Sign Partnership To Introduce Risk Management Services
As per the press release, GSR will be offering a suite of structured products to mining firms starting in January 2020. In this way, miners in different cryptocurrency networks will have the possibility to reduce their exposure to the market and improve their returns.
Some of the new risk management products that GSR is planning include customized Swaps, Collars and other bespoke structured products.
The main reason behind the decision to work on these risk management services is related to the fact that the cryptocurrency industry and markets are very volatile, which heavily affects the sustainability of the sector.
Cryptocurrency miners have to invest large amounts of money in order to remain profitable and, in many cases, they must shut down their operations due to market conditions. Electricity prices and the cost of mining equipment are also important factors that would have an impact on their business.
Christian Gil, the co-founder of GSR, explained that many participants in the industry are under-hedged against an adverse price action. At the same time, he stated that miners are one of the main parts of the whole cryptocurrency space and market.
Basically, there is an unpredictable business model that GSR wants to tackle with a new set of products and services. As the whole market expands, participants get more exposure and firms invest larger amounts of money, having a quality risk management solution for miners seems to be the right step into a less volatile and unpredictable future in this sector.