Definition
A hashprice non-deliverable forward (NDF) is a cash-settled contract whose value tracks Bitcoin mining hashprice rather than requiring any actual hashrate to change hands. Two parties agree on a fixed hashprice for a future date; at expiry, that fixed price is compared against a reference settlement value, and the difference is paid in cash from one party to the other. Because nothing is physically delivered, an NDF gives mining-revenue exposure to participants who do not own or operate machines. This entry is educational and is not financial advice.
How settlement works
Luxor introduced the first product of this type, the Luxor Hashprice NDF, an OTC instrument settled against its Bitcoin Hashprice Index. One party agrees to buy hashprice at a fixed level; if the index settles higher, the seller pays the buyer the difference, and if it settles lower, the buyer pays the seller. Contracts can be reconciled in USD or in BTC equivalents, and the facilitator manages order matching and counterparty risk as the principal to each trade. The first BTC-denominated hashprice NDF was executed between Luxor and Digital Power Optimization.
NDF versus a deliverable forward
An NDF differs from a hashrate forward contract mainly in delivery: the forward can require real mining output to be handed over, while the NDF only ever exchanges cash. That makes NDFs attractive to institutional participants who want a clean financial hedge or position without logistics, custody, or hardware operation. As with all derivatives, both sides face counterparty and market risk, and a hedge that locks a price also forgoes favorable moves.
The reference metric is hashprice; for the broader venue where these instruments trade, see the hashrate marketplace.
In Simple Terms
A hashprice non-deliverable forward (NDF) is a cash-settled contract whose value tracks Bitcoin mining hashprice rather than requiring any actual hashrate to change hands. Two…