Luxor refutes claims its Bitcoin hashrate-backed product is BlockFi, Celsius 2.0
An upcoming Bitcoin (BTC) hashrate-backed product that could offer 10% to 13% returns shouldn’t be compared to failed products by BlockFi or Celsius as its returns come from proof-of-work, not “ponzi schemes,” claims the product’s creator Bitcoin mining firm Luxor Technology.
The legitimacy of Luxor’s hashrate-backed product was highlighted in an Oct. 17 What Bitcoin Did podcast. Host Peter McCormack expressed concern at Luxor's upcoming offering and discussed what a worst-case-scenario for Luxor’s product would look like.
Luxor’s Head of Derivatives Matt Williams told Cointelegraph that its hashrate-backed product isn’t a repeat of products from BlockFi or Celsius because it's backed by economic production.
“There is actual proof-of-work and demonstrable economic activity happening [here].” Williams said. “The return comes from miners giving up some of the margin that they would produce from their mining business to an investor that is financing their operation.”
Luxor’s product works through investors receiving a cut of loan repayments by posting Bitcoin as collateral to Luxor — which will then loan it to other miners to fund their operations.
The returns are created when hashrate is purchased from a Bitcoin miner at a discounted price and is then “locked in” when sold at a higher price. Bitcoin in the form of mining rewards come from that hashrate. Luxor estimates investor returns will range from 10% to 13%.
The process will be managed through Luxor’s upcoming hashrate marketplace.
Williams claimed the offering means miner’s are provided with “better” access to capital because they won’t have to sell their mined BTC to fund their operations.
“It can be a more economically viable option for miners because they can receive
Read more on cointelegraph.com
