What Is “Basis Risk” in the Context of a Miner’s Hedging Strategy?

Basis risk is the risk that the price of the asset being hedged (the mined crypto) and the price of the hedging instrument (the futures contract) do not move in perfect tandem. The "basis" is the difference between the spot price and the futures price.

If the basis changes unexpectedly between the time the hedge is placed and when it is lifted, the miner's final selling price will differ from the price they intended to lock in, resulting in an imperfect hedge.