Luxor refutes claims its product is BlockFi, Celsius 2.0

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

An upcoming Bitcoin hashrate-backed product that could offer 10 per cent to 13 per cent returns should not be compared with failed products by BlockFi or Celsius as its returns come from proof-of-work, not “ponzi schemes,” claims the product’s creator Bitcoin mining company Luxor Technology.

The legitimacy of Luxor’s hashrate-backed product was highlighted in an October 17 What Bitcoin Did podcast.

Luxor’s Head of Derivatives Matt Williams told Cointelegraph that its hashrate-backed product is not a repeat of products from BlockFi or Celsius as it is backed by economic production.

There is actual proof-of-work and demonstrable economic activity happening (here), he added. 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.

The main takeaway: the return comes from hashrate, not from pixie dust, ponzi schemes, or rehypothecation, he said.

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 bought 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 which come from that hashrate. Luxor expects investor returns will range between 10 per cent and 13 per cent.

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 as they would not have to sell their mined bitcoin to fund their operations.

It can be a more economically viable option for miners as they can receive funding upfront while retaining ownership of their mined Bitcoin, Williams said.

Luxor stressed it is not using its own mining pool and is only acting as an intermediary between investors and mining companies.

We only custody bitcoin for a very short period of time as we move funds from the buyer (investor) to the seller (mining company), Williams said.