Hedging hashrate reduces Bitcoin  mining pool block reward variance. This chart shows the expected earnings of a pool if they bet against themselves every block for one difficulty epoch. By hedging hashrate every block, pools reduce 2 standard deviations of risk to less than 1.

If you’re not hedging, you’re hoping. Hope is not a business strategy to deal with variance risk embedded within Bitcoin Make money less than 1% of the time vs make money more than 99% of the time? I would much rather not wait 61 hours for my next payout. I would much rather be making money most of the time. If you’re mining for ocean then you can expect to wait, but that doesn’t stop you from hedging. Any miner can turn their dull waiting time into an opportunity! By betting against your pool, you can make money regardless if you mine the next block or not, and thus hedge your hashrate. By betting against your own pool you ensure cash flow without further centralizing hashrate. Miners want stable cashflow (FPPS dominance is evidence of this enough) and small pools with high variance have near certainty of gamblers ruin if they pay FPPS payouts. Hashrate hedging can be employed to enable miners to lower variance without adding too much risk to the pool operator like FPPS. Hedging hashrate is a win-win for the mining ecosystem. Miners can direct their hashrate to smaller pools and smaller pools can be profitable despite high variance. By hedging hashrate a pool doesn’t need to risk gamblers ruin by offering stable FPPS payouts, and miners don’t need to worry about cash flow risk due to variance.

If a miner directs their hashrate to a pool with 5% hashrate, they only get paid 5% of the time (assuming proportional payouts). If a miner hedges their hashrate (by betting against their own pool) then they get paid 95% of the time. Hedging hashrate therefore reduces cash flow variance for miners in pools with proportional payouts. Which is preferable? Make money 5% of the time OR make money 95% of the time?

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Bitcoin Mining finance is broken, and we’re fixing it. Mining is essentially a globally decentralized provably probabilistic computational race. Miners compete to be the first to publish the next block, and whoever wins makes money. The mining contest is a winner-take-all, so the losers do not make money. All miners lose most of the time, so all miners do not make money most of the time. Bitcoin Prediction Market has created betting markets around the mining contest, enabling people to bet on who wins and who loses. Miners can hedge against the risk of losing the race. They can do this by betting against their own pool, or on a dominant pool like Foundry or Antpool. Speculators can make money by predicting which pool will win, based on their hashrate. Bitcoin Prediction Market revolutionizes mining finance by enabling miners to protect their cashflow and speculators to profit from the block discovery process. In the past, miners could only make money by winning the contest, and speculators could only make money by betting on price. Now, everyone can profit from every single block. Be part of this game-changing moment in Bitcoin's history! Join the revolution and learn more at

Bitcoin Prediction Market

Monetize your knowledge and forecast the future. Place bets by sending lightning payments. Receive winnings directly to your lightning address. Bet...