Luxor, a Bitcoin mining derivatives provider, reported a 6–13% annualized Bitcoin financing spread in its September lookback, published Oct. 9 . It says lenders and Bitcoin treasury companies bought prepaid mining power and paired it with a price hedge, while miners used the reverse trade to obtain financing.

The return comes from the discount a miner accepts for receiving money upfront. The hedge can fix gross BTC receipts if mining delivery and settlement perform, while the investor’s capital remains exposed to failure in that repayment chain. Luxor’s reported September range does not establish an executed return after costs or a quote available today.

Mining power, or hashrate, produces revenue at a rate known as hashprice. Luxor’s contracts express that rate in Bitcoin or dollars per unit of computing power per day. Buying future mining power gives the purchaser exposure to the income that power generates over the contract period.

In a deliverable forward , the buyer pays the full purchase price upfront. The seller must deliver hashrate to Luxor’s Bitcoin Mining Pool, with the buyer’s daily BTC settlement tied to the hashprice index and contracted amount of mining power.

That prepayment supplies financing to the miner. Luxor says deliverable forwards typically trade below comparable non-deliverable forwards to compensate the buyer for credit risk and the cost of committing capital. The lower prepaid purchase price is the source of the lender’s potential profit.

Without a hedge, the buyer’s receipts would vary with the mining-revenue rate. The paired trade adds a sale of a non-deliverable forward , or NDF, which settles in cash rather than requiring physical mining-power delivery.

For the NDF seller, daily settlement is the agreed hashprice minus that day’s index rate, multiplied by the contracted hashrate. When the index is below the agreed price, the seller receives the difference. When it is above, the seller owes the difference.

If the two legs use the same BTC denomination, hashrate quantity, settlement dates and index methodology, their price exposures cancel. Fully delivered mining receipts at the daily index rate, plus the NDF settlement, equal receipts at the fixed NDF rate. The profit depends on how much those receipts exceed the prepaid purchase cost and other costs.