DeFi
Loka Mining Launches New DeFi Protocol to Address Bitcoin Mining’s $10 Billion Liquidity Crisis
Key points to remember
- Loka Mining has launched a new protocol that allows Bitcoin miners to sell future mining rewards to institutional investors at a discount, providing them with immediate liquidity.
- In collaboration with Hashlabs, which operates in Ethiopia, Finland and Kazakhstan, the initiative focuses on environmentally friendly and profitable Bitcoin mining practices.
- The protocol uses ckBTC and Internet Computer’s Chain Fusion technology for transparent, low-cost transactions and non-custodial management of contracts and mining rewards.
The recent Bitcoin halving has cut Daily mining revenues have dropped from $78 million to $26 million, creating an urgent need for liquidity to avoid the risk of capitulation. To solve this problem, a decentralized Bitcoin (BTC) mining pool Loka Mining has launched a new DeFi protocol designed to provide immediate liquidity to miners. The initiative, developed in partnership with a sustainable energy mining provider Hashlabsaims to bring immediate liquidity to Bitcoin miners through forward hash rate contracts.
How it works? The newly launched protocol allows miners to sell their future mining rewards to institutional investors at a discount, ensuring immediate liquidity. This is achieved through forward hash rate contracts, which are 110% overcollateralized and tokenized for secondary market trading.
By providing a mechanism to sell future mining rewards At a discounted price, the protocol reduces the financial risks associated with Bitcoin market fluctuations and improves the token’s liquidity. Notably, about 10% of Bitcoin’s total supply, valued at around $50 billion, is kept in wallets controlled by minors.
“We’ve seen significant interest from large investors looking for better ways to access Bitcoin,” said Andy Fajar Handika, Founder of Loka. “With Hashlabs’ hashrate supply and access to miners, we’re delivering this, without counterparty risk. This protocol provides non-custodial, trustless access to Bitcoin that rewards miners for the work they do by providing a necessary service to the network.”
Hashlabs, which operates in Ethiopia, Finland, and Kazakhstan, contributes approximately 500 petahashes to the network, representing 0.08% of the total Bitcoin mining capacity. The company emphasizes its commitment to the sustainability and profitability of its mining operations, with the aim of reducing the environmental footprint of Bitcoin mining.
“We are proud to bring more liquidity to DeFi through a mining pool that provides investors with much-needed access to Bitcoin futures,” said Alen Makhmetov, Co-Founder of Hashlabs. “Equally important, we are able to provide this service by supporting the most sustainable methods of Bitcoin mining around the world. By ensuring the financial health of miners, we are simultaneously improving the environmental well-being of Bitcoin.”
The protocol leverages ckBTCwhich uses Internet Computer’s Chain Fusion technology to interact directly with the Bitcoin network. This technology allows Loka to verify mining contributions and manage rewards transparently.
ckBTC, a 1:1 digital twin backed by Bitcoin, facilitates low-cost transactions and non-custodial management of contracts and mining rewards.
This initiative introduces a new model to the $10 billion annual Bitcoin mining industry, allowing miners to access immediate liquidity to expand their operations or hedge against price volatility.
Read also: How Does Bitcoin Halving Impact Cryptocurrency Market Dynamics?