Margin Requirements, Policies and Procedures

1.0 Overview

This document sets out the margin requirements, policies and procedures for Luxor’s Bitcoin Hashrate Forwards. The purpose of these requirements, policies and procedures is to protect Luxor and its hashrate forward counterparties from the financial risks associated with trading derivative products and to comply with applicable laws, rules and regulations.

2.0 Scope

The requirements, policies and procedures in this document apply to the following Luxor Bitcoin Hashrate Forward products:

• USD-Denominated Non-Deliverable Bitcoin Hashrate Forward
• BTC-Denominated Non-Deliverable Bitcoin Hashrate Forward
• USD-Denominated Deliverable Bitcoin Hashrate Forward
• BTC-Denominated Deliverable Bitcoin Hashrate Forward

3.0 Mark-to-Market

3.1 Current Procedures

Luxor’s USD-denominated and BTC-denominated Bitcoin Hashrate Forwards settle daily to Luxor’s USD and BTC Hashprice Index respectively.

Realized gain (loss) calculations are based on:

• Daily contract expiration
  • When a daily position expires, it is settled to Luxor’s USD or BTC Bitcoin Hashprice Index.
• Offset future daily positions
  • When a future position is offset (i.e., the counterparty has both a long and short position on the same day), the difference between the weighted average unit hashprice of units sold and units bought is multiplied by the number of offset contracts, and realized as a gain or loss.

Unrealized gain (loss) calculations are based on:

• Non-offset future daily positions
  • When a future position is not offset, the weighted average unit hashprice of the non-offset position is marked-to-market using the most recent daily settlement rate of Luxor’s USD or BTC-denominated Bitcoin Hashprice Index. If the daily settlement is expected to occur after a Bitcoin block subsidy halving, the position is marked-to-market with a hashprice calculated using the most recent daily settlement rate of Luxor's USD or BTC-denominated Bitcoin Hashprice Index, taking into account the difficulty, transaction fee, Bitcoin price, and a future forecast of the block subsidy instead of the previous day's value.

Realized margin balances are calculated as: margin deposits + realized gain (loss) - margin withdrawals + upfront notional payment credit - upfront notional repayment owed.

Unrealized margin balances are calculated as: margin deposits + realized gain (loss) + unrealized gain (loss) - margin withdrawals + upfront notional payment credit - upfront notional repayment owed.

Upfront notional payment credit and upfront notional repayment owed refer to the notional value of outstanding and expired deliverable forward sales with upfront payment.

3.2 Potential Future Procedures

In the future, a forward pricing model could be introduced to Luxor’s Bitcoin Hashrate Forward mark-to-market procedures.

4.0 Eligible Margin

U.S. dollar bank wire, USDC and Bitcoin are the only assets Luxor will accept as margin for Bitcoin Hashrate Forward products. The margin must be denominated in the same currency as the contract. Eligible collateral for each Luxor Bitcoin Hashrate Forward product are outlined in the table below:

5.0 Variation Margin

5.1 Purpose

The purpose of Luxor’s variation margin procedures is to protect Luxor from the current financial exposure that has already been incurred by counterparties, primarily from changes in the mark-to-market value of contracts after initial trade execution.

5.2 Standard Procedures

For Luxor’s Bitcoin Hashrate Forwards, variation margin will be collected when the minimum of a counterparty’s realized and unrealized margin balance falls below the maintenance margin requirement (as defined in the schedule below). The full amount necessary to fully cover the mark-to-market exposure, as defined by the maintenance margin schedule, will be collected from counterparties. If the margin previously collected fully collateralizes the mark-to-market exposure of the counterparty, as defined by the maintenance margin schedule, then no variation margin will be exchanged.

5.3 Custom Procedures for Qualified Deliverable Forward Sellers

For qualified sellers of Luxor’s Deliverable Bitcoin Hashrate Forwards, variation margin will be collected when the minimum of a counterparty’s realized margin balance falls below the maintenance margin requirement (as defined in the schedule below). To qualify, sellers must complete Luxor’s credit profiling requirements and procedures.

6.0 Initial and Maintenance Margin Requirements

6.1 Purpose

The purpose of Luxor’s initial and maintenance margin requirements is to protect from the potential future exposure that could arise from changes in the mark-to-market value of the contract during the time it takes to close out and replace the position in the event that one or more counterparties default.

6.2 Procedures to Inform Initial Margin Requirements

Luxor’s initial margin requirements are informed by:

1. A Quantitative Margin Model, and
   • Potential future exposure should reflect an extreme but plausible estimate of an increase in the value of the instrument that is consistent with a one-tailed 99 percent confidence based on historical data. Time horizon should be 10 days plus the number of days in between variation margin exchanges.
   • Historical data should include a period of financial stress.
   • Historical data should not exceed 5 years.
   • Historical data should be equally weighted.
2. Supplemental Credit Profiling Procedures
   • Only applies to qualified sellers using Luxor’s BTC-Denominated Deliverable Bitcoin Hashrate Forwards, after conducting credit profiling procedures.

6.3 Procedures to Determine Initial Margin Requirements

• Luxor shall reevaluate initial margin requirements annually.
  • The last evaluation was conducted on November 14, 2025.
• In the absence of supplemental credit profiling, Luxor will determine initial margin requirements using a quantitative margin model as outlined under section 6.2.
• If Luxor conducts supplemental credit profiling on a specific counterparty, that counterparty’s initial margin requirement may be determined by the discretion of the Luxor Derivatives Team. Supplemental credit profiling procedures must be completed before applying non-standard margin rates to any counterparty.
• Luxor collects the following, at a minimum, for supplemental credit profiling:
  • Bitcoin mining site information including:
    • Insurance documents for each site.
    • Power procurement documents for each site (i.e., power purchase agreements, proof of generation capacity, or hosting contracts).
  • Proof of legal jurisdiction.
  • Mining pool performance data.
  • Most recent financials including balance sheet, income statement, cash flow statement (if using accrual accounting) and a list of all future financial obligations and contracts.
  • Luxor relationship, business and financial risk questionnaires.
  • Supporting documentation for performance bond or guarantor.
• Buyers of Luxor’s Deliverable Bitcoin Hashrate Forwards are not subject to the initial margin schedule, but will instead make full upfront payment for their purchased hashrate.

6.4 Standard Procedures to Determine Maintenance Margin Requirements

• Luxor’s maintenance margin schedule is determined by applying a 20% discount to the initial margin schedule.

6.5 Standard Initial And Maintenance Margin Schedule Requirements

The following schedules are applied to the notional value of a counterparty’s non-offset future daily positions.