After becoming the first online commodities exchange for Bitcoin mining hashing power, CEX.IO has now taken their level of innovation to the next level with futures contracts on the delivery of cloud mining equipment. FHA and FHM are the two futures contracts available for mining equipment right now, and the contracts will convert into GHS once they are executed. This is basically a way for traders to bet on the future price of hashing power on the Ghash.IO Bitcoin mining pool.
Future Hashes April is the futures contract that will expire on April 26, 2014 at 00:00 GMT, and the contract will turn into a mining reward paying asset after the contract has been executed. The same concept applies for Futures Hashes May. The cloud mining equipment for the holder of the FHM contract will be delivered on May 26, 2014 at 00:00 GMT. Since the actual mining equipment is not delivered into a CEX.IO account until a date in the future, the shares of block rewards related to these contracts cannot be sent out until the contract has been executed. To be clear, there are no dividends paid out for owners of FHM or FHA. Those rewards are only paid out after the contract has been executed, the shares of GHS have been delivered, and actual mining has started.
Putting Futures in Simple Terms
Some traders may be new to the idea of trading futures contracts, and the best way for these users to think about these new financial products is as nothing more than a pre-sale for GHS. You’re basically putting in an order to buy 1 GHS on April 26 if you purchase FHA today. On top of that, you also have the ability to sell your right to delivery before April 26. This means that some traders could actually decide that they no longer wish to take delivery of GHS on April 26 in a situation where the price of FHA has risen.
Buying GHS at a Discount
These futures contracts could potentially be a way for traders to purchase GHS at a discount. As of March 27, FHM is actually trading at a rate less than half of GHS, although FHA is still trading at basically double FHM. Although the owners of these futures contracts will not be able to reap any rewards until April or May, the large discount on the delivery of GHS is still attractive to many traders.
More Futures Contracts?
There are no concrete plans as to what kind of additional futures contracts could be added for trade on CEX.IO in the near future. While there are no plans to offer this kind of futures contracts on other mining pools, it’s quite possible that there could be futures contracts for other months, such as June and July, if these first two contracts turn out to be a success. The amount of volume on FHM and FMA is definitely a good sign for the addition of similar financial products on CEX.IO in the future.