How Is the ‘Cost of Carry’ Calculated for a Cryptocurrency Futures Contract?

The cost of carry for a cryptocurrency futures contract is primarily calculated as the financing cost. Since storage costs for digital assets are often negligible or zero, the formula simplifies to: Cost of Carry = Spot Price (Risk-Free Interest Rate – Convenience Yield) Time to Expiration.

The risk-free rate represents the cost of borrowing the funds to buy the spot asset, and the convenience yield is the non-monetary benefit of holding the physical asset, which is often low for crypto.