> ## Documentation Index > Fetch the complete documentation index at: https://docs.mezzamine.com/llms.txt > Use this file to discover all available pages before exploring further. # Performance Across Market Cycles > Modeled behavior of the Fleet Hedge, Principal Hedge, and combined structures across the reference scenarios. The structures are evaluated against the same reference facility, fleet, operating costs, default rules, and recovery assumptions across four market paths. The comparison isolates what each layer of the structure contributes: production creates payment capacity, the Fleet Hedge protects that capacity, the Principal Hedge protects residual principal, and collateral closes the remaining recovery gap. ## Scenario summary | Structure | Gradual-decline path | Severe-combined path | Final reference outcome | | --------------- | ------------------------ | ---------------------------------------------- | --------------------------------------------- | | Fleet Hedge | Current through maturity | Default near month 12.9 after 15.87 BTC repaid | Full principal recovery in reference stresses | | Principal Hedge | Default near month 23.5 | Default near month 9.2 | Full principal recovery in reference stresses | | Both layers | Current through maturity | Default near month 12.9 after 15.87 BTC repaid | Full principal recovery in reference stresses | ## Stable BTC with network growth The stable scenario holds BTC at \$80,000 while network hashrate grows 20% per year. The fleet starts comfortably above its approximately \$49,200 program breakeven, yet the breakeven rises as each machine earns a smaller share of network rewards, reaching roughly \$67,400 after one year. The facility remains current because opening margin and borrower cure liquidity absorb later-period shortfalls while principal amortization steadily reduces the required payment. This scenario shows that network growth can create payment pressure even when spot is unchanged. It also defines the cost of protection in a benign path, where hedge value comes from reducing the dispersion of bad outcomes while funding, premium, and execution costs are still paid. ## Sharp BTC rally The rally analysis uses a gradual 50% increase from \$80,000 to \$120,000 and an immediate 100% increase to \$160,000. Mining revenue rises in dollar terms while fiat operating expenses consume fewer BTC, so the borrower retains upside and services the debt comfortably in both paths. The rally is where the Fleet Hedge demands the most discipline. It adds short exposure against more deeply profitable production, and existing shorts lose mark-to-market value during the rally, which raises variation-margin requirements. The credit decision therefore chooses leverage that survives the intended rally distribution with a usable margin buffer. The option-based Principal Hedge behaves differently: its cost is the fixed premium already paid, and borrower upside remains available above the strike. Upside participation follows the hedge design, so a combined mandate can reduce Fleet Hedge coverage or widen rebalance thresholds when borrower upside and margin efficiency have higher priority. ## Gradual decline through program breakeven The gradual-decline scenario moves BTC from \$80,000 toward \$55,000 over roughly nine months and then toward \$50,000 by maturity while network hashrate continues to grow. This path crosses the rising program-breakeven line gradually and shows the entire credit transition from normal operations to payment stress. The Fleet Hedge changes the path before default: the short book gains value as BTC falls, scheduled rebalancing realizes those gains, and with lender approval the model applies them to payment gaps, completing all scheduled principal payments and avoiding modeled default. Running both layers applies Fleet Hedge gains to scheduled cash flow and retains Principal Hedge protection for residual principal. ## Severe combined stress The severe scenario is the reference tail case. It combines a BTC decline from \$80,000 toward the mid-\$30,000s within eight months, 35% annual network growth, 90% uptime, a higher power price, exhausted borrower liquidity, machine curtailment below variable-cost economics, and an additional stress haircut on ASIC recovery. Every major credit driver moves against the lender together. The Fleet Hedge realizes protection during the decline and extends payment performance to about month 12.9, by which point roughly 15.87 BTC of principal has been repaid, so remaining controlled BTC and ASIC value cover the residual balance. The Principal Hedge adds banked hedge value ahead of hardware liquidation, and running both layers produces full modeled principal recovery. The full recovery breakdown is on the [Principal Protection](/for-lenders/prime-lending/principal-protection) page. ## Simulation results Across 3,000 paths in the reference Monte Carlo, the Fleet Hedge changes the frequency of payment default from approximately 44.5% to approximately 3.3% under the stated cure rule, and the hedged structures produce full principal recovery across the simulated set under the base counterparty and execution assumptions. The remaining risk shifts away from pure BTC price risk and toward implementation factors: margin breach, counterparty loss, hedge slippage, and weaker-than-modeled ASIC recovery. These figures reflect the stated reference assumptions and are modeling outputs rather than forecasts or a guarantee of future performance.