What Is “Basis Risk” When Using Futures Contracts to Hedge Cryptocurrency Revenue?

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

If the basis narrows or widens unexpectedly, the hedge will not be perfectly effective, potentially resulting in a loss on the combined position.