The Missing Half of the Bitcoin Hashpower Market
A Market That Covers Only the Present
Hashpower is produced at industrial scale, priced every day, and bought and sold continuously, yet the market that trades it describes only the present moment. Spot marketplaces show what a unit of hashpower costs today, and they carry no public information on what it is expected to cost in thirty days, in six months, or after the next halving.
A commodity market that cannot express a view on the future has half of its structure missing, and the most visible gap is the forward curve.
This article sets out our view that the absence of a public forward curve helps explain why hashpower remains difficult for analysts to model and for allocators to size; and that a benchmarked, cash-settled curve is the development most likely to change that.
What a Complete Commodity Market Contains
Mature commodity markets tend to share five structural features. A spot market sets the price for immediate delivery from current supply and demand, and a forward curve extends that price across successive future dates, expressing the market's collective expectation of supply, demand, and carrying costs over time. A benchmark gives the whole structure a common reference: a transparent, reproducible price that contracts can settle against, as Brent and WTI do in crude oil or the LBMA Gold Price does in bullion. Commercial participants with physical exposure, the hedgers, use forward contracts to fix prices for future production or consumption, and speculators take the other side of those trades because they hold a view on price, supplying the liquidity that keeps spreads tight for everyone.
These features reinforce one another. Hedgers need a curve to hedge against, speculators need a benchmark to price against, and the benchmark gains authority only as volume settles against it. A market that has a deep spot venue and little else therefore consists of many separate trades, each priced in isolation, with no shared structure connecting them.
Hashpower Already Has the Economics of a Commodity
Hashpower has the economic characteristics that give rise to commodity markets elsewhere.
Producers convert electricity, hardware, and capital into hashpower, so they operate along a cost curve on which the lowest-cost operators remain profitable at prices where the highest-cost operators do not. Those producers compete openly, and the Bitcoin protocol's difficulty adjustment, which recalibrates every 2,016 blocks (roughly every two weeks), tends to push the network toward an equilibrium in which the marginal producer earns close to its cost of production.
Demand for hashpower is anchored in the protocol itself, which pays block rewards and transaction fees to the participants who supply it, and in buyers who acquire hashpower directly, through marketplaces or bilateral agreements, to gain exposure to that revenue stream.
Hashprice, the revenue earned per unit of hashpower per day, usually quoted in USD per PH/s per day, condenses the system into a single observable figure that moves with bitcoin's price, network difficulty, the block subsidy, and transaction fees.
Hashpower is also non-storable. A unit that goes unused in a given interval is gone, as with electricity, so no participant can buy today and hold forward to capture a later price. Forward prices for non-storable commodities therefore cannot be tied to spot through a cost-of-carry relationship, and they reflect expectations of future conditions directly, together with whatever risk premium participants require to take the other side.
For hashpower, those expectations include the path of bitcoin's price, the trajectory of network difficulty, the halving schedule, and fee revenue, which together form the information a public forward curve would aggregate.
Why Spot Marketplaces and Bilateral Forwards Leave Price Formation Incomplete
Spot marketplaces and bilateral forward agreements each perform a clear function in today's market. Spot marketplaces provide immediate access and observable transaction prices, while bilateral forwards allow two counterparties to agree on terms tailored to their own needs. Price formation, however, depends on more than either can supply.
Price formation is the process through which the information and expectations of many participants converge into a price that everyone can observe. It requires quotes that are public, firm, continuous, and comparable across maturities. Spot marketplaces supply public prices for a single maturity, immediate delivery, and the terms of that delivery can vary from one marketplace to the next, which leaves the spot price without a single authoritative reference. Bilateral forwards cover other maturities, but each agreement is negotiated privately, priced once, and visible only to its two counterparties, so the information it contains never enters the wider market, and the contract itself cannot easily be transferred or unwound with a third party.
A forward curve closes this gap by aggregating many participants' expectations into a visible set of prices at successive maturities. Its slope becomes a readable signal, since a curve that declines with maturity indicates that the market expects lower hashprice ahead, while a rising curve indicates the opposite. Neither signal is available when forward information stays inside private contracts.
What a Public Forward Curve Gives Analysts and Allocators
A public forward curve is expected to change the work of analysts and allocators in several concrete ways.
Expectations become observable first. An analyst who models future hashprice currently has no market price against which to test the model, so the output remains an opinion without an external check, whereas a curve allows the same model to be compared with market-implied prices at each maturity, and any gap between the two becomes either a trade or a prompt to revisit assumptions.
Suppose spot hashprice is 50 USD per PH/s per day, while futures at three and six months trade at 46 and 42. The downward slope indicates that the market expects hashprice compression, for instance from rising difficulty. An analyst whose model projects 48 at three months holds a view 2 USD per PH/s per day above the market, and can express that view with a position or use it to refine the model. These figures are round and illustrative, and they are not market data.
Valuation work also gains an input. Cash flow models for businesses and portfolios with hashpower exposure currently rely on a spot price held constant or on an analyst's private projection, and a curve supplies a market-based projection that can be audited, compared across analysts, and updated continuously.
Relative value analysis becomes possible once several maturities trade side by side. Calendar spreads, the basis between spot and futures, and the relationship between hashpower and bitcoin each become measurable quantities. Because hashprice depends on difficulty and fees as well as on bitcoin's price, hashpower exposure is expected to carry drivers that only partly overlap with those of bitcoin itself, which gives allocators an additional, separately sizable source of risk to consider.
Risk measurement completes the picture. A continuous, benchmarked price series allows allocators to calculate volatility, correlation, and drawdown on the same basis they apply to every other position, and those calculations are typically a prerequisite for inclusion in a portfolio risk framework.
Completing the Market
We expect the features described above to develop together, since each reinforces the others.
HPDX is built to supply the missing structure. Hashpower derivatives, the category covering futures, perpetual contracts, and options referenced to the price of hashpower, give traders a venue where expectations about future hashpower prices are expressed in public. Futures at successive maturities of one, two, and three months form the curve, perpetual contracts provide continuous pricing between maturities, and options add a market view on volatility, with all positions instantly cash-settled and no physical delivery involved.
Allocators are likely to judge this market the way they judge any commodity market, by the depth of its curve, the credibility of its benchmark, and the diversity of its participants. A hashpower market that develops all three is expected to draw research coverage and capital that a spot-only market is structurally less likely to attract, and we regard that completion as the next stage in the maturation of hashpower as an asset class.