How Does a Miner Use a Long Futures Contract to Hedge Their Equipment Costs?

A miner might anticipate buying new mining hardware in the future, which is often priced in fiat currency. However, their revenue is in cryptocurrency.

To hedge against the risk of the cryptocurrency's price falling before the equipment purchase, they can enter a long futures contract. This locks in a purchase price for the crypto, ensuring that the fiat value of their crypto holdings remains stable relative to the future cost of the equipment.