Loka, a decentralized Bitcoin mining pool, has partnered with Hashlabs to offer Bitcoin miners access to immediate liquidity via a new protocol.
The partnership with Hashlabs, a sustainable energy mining provider with operations in Ethiopia, Finland and Kazakhstan, enables Loka to launch a permissionless protocol through which miners can sell future mining rewards.
Eyeing the $10 billion BTC mining market
Bitcoin mining is currently a $10 billion industry, and Loka aims to gain traction through a DeFi model that relies on renewable energy-powered sources to mitigate financial risks related to price volatility. This approach will also bring more liquidity to the market, as miners hold an estimated 10% of the Bitcoin supply, equivalent to about $50 billion.
The protocol will offer contracts overcollateralized at 110%, with these tokenized to allow for instant access to liquidity across secondary markets. This means miners dealing with reduced mining revenues post-halving can tap into and manage liquidity while hedging against market volatility.
Specifically, the new renewable energy mining pool targets institutional investors, offering BTC hashrate contracts at discounted rates and directly from renewable energy miners.
“We’ve seen tremendous interest from larger investors seeking better ways to access Bitcoin, and thanks to Hashlabs’ supply of hashrate and access to miners, we’re providing that— with no counterparty risk,” Andy Fajar Handika, the founder of Loka Mining, said in a statement.
Hashlabs co-founder Alen Makhmetov believes the new protocol is an important step toward supporting sustainable BTC mining. It’s also key to safeguarding miners’ financial health, which Hashlabs will support via sustainable and low-cost energy solutions. The company controls about 500 petahashes, or 0.08% of the total hashrate on the Bitcoin network.
New protocol to leverage ckBTC
Loka’s protocol will offer a non-custodial and trust-minimized environment, with miners getting payouts and investors gaining liquidity through ckBTC.
Chain-key Bitcoin (ckBTC) is a token backed 1:1 by BTC held 100% on the Bitcoin mainnet. Unlike traditional wrapped tokens, ckBTC does not rely on centralized bridges for conversion to BTC. Instead, ckBTC leverages the Internet Computer’s Chain Fusion to facilitate direct interaction with the Bitcoin network.
With Chain Fusion, Loka can utilize smart contracts to verify mining contributions and manage rewards.