Contributor: Crypto Pilote
With climate disruption, major weather events are becoming more frequent, more intense, and above all harder to anticipate. For dozens of industries, effective hedging against multi-billion events is no longer an option but a necessity to avoid critical financial situations or even bankruptcy.
We were given a striking illustration of this recently with the historic snowstorm in the United States: a surge in gas prices, extreme stress on the power grid, and the abrupt shutdown of entire sectors of the economy.
While insurers do exist for major disasters (cyclones, storms, etc.), more diffuse losses (such as a drop in revenue caused by an abnormally mild winter) are generally not covered.
Faced with these risks, companies are increasingly turning to financial instruments, particularly options, to hedge their exposure. By providing more precise and higher-quality weather data, Zeus could thus become a key player in the finance of tomorrow.
I – Expanding market
The weather market is divided into two major segments:
• “Traditional” weather, which impacts energy, agriculture, tourism, and more.
→ Primarily hedged through options.
• Rare and destructive events, which directly damage infrastructure.
→ Covered through insurance, Cat Bonds, and ILS (CRT).
The market focused on non-catastrophic weather risk is estimated at around $25 billion in 2025, according to Speedwell (a leader in weather data and forecasting), with expected annual growth of 9.3%, reaching $40 billion by 2033.
Extending the analysis to Climate & Catastrophe Risk Transfer (CRT), which covers rare and severe events (storms, hurricanes, wildfires, floods, blackouts, etc.), the addressable market then reaches approximately $140 billion.
Climate change is therefore a significant and growing financial reality. Indeed, this market has been expanding rapidly for several years. While 90% of deals are executed OTC, the public market remains largely centralized around the Chicago Mercantile Exchange (CME).
Thanks to the CME, we know that in 2025, trading volumes surged (+260%), while the number of options issued increased by 8% in the energy and agriculture sectors. The bulk of this activity is concentrated in Heating Degree Day (HDD) and Cooling Degree Day (CDD) options.
These products make it possible to estimate seasonal temperature anomalies in order to anticipate heating or cooling needs and hedge against their potential impact on business activity. This is therefore a market primarily geared toward energy suppliers, who need to forecast future consumption and avoid unpleasant surprises.
Moreover, the recent shift toward green energy has been fueling this growth. The energy mix is becoming increasingly dependent on renewables (wind, hydro, solar), which are highly correlated with weather conditions.
But while power generation represents a significant share of the market, it is not the only sector affected: simple temperature deviations of just a few degrees can have a major impact on many industries without causing any infrastructure damage, hence the popularity of CDD/HDD options.
Many industries are directly exposed:
• Apparel manufacturers
• Construction sites
• Agriculture
• Transportation
More surprisingly, this type of market also attracts certain hedge funds, which use it to enhance diversification, as weather is fully uncorrelated with traditional financial markets.
A classic example would be:
• selling protection against a mild winter to an electricity provider,
• selling protection against a harsh winter to an agricultural producer.
By covering opposite scenarios, the fund collects the premium as long as weather conditions remain within an average range. This is how players with no direct connection to weather can act as counterparties to multiple affected companies.
However, as mentioned in the introduction, the majority of these contracts are traded off-market, and for a key reason: they require a high degree of customization, and therefore precise data and interpretation.
This level of sophistication is not accessible to everyone. Access to such information is a real bottleneck for a market that is otherwise poised to expand rapidly.
This growing need for expertise was confirmed by Bloomberg, which reported last March that major hedge funds are now hiring meteorologists to refine their risk models and adjust premiums accordingly.
It is precisely in this context that Zeus can leverage its expertise by providing ultra-personalized weather data to a fast-growing sector that is still largely constrained by limited visibility in an increasingly unstable environment.
II – Technology and data
1. Pointed data
Historically, weather data was collected through locally deployed sensors, often scattered randomly across a territory. Typically located around points of interest (airports, military bases, public buildings, etc.), the data was highly fragmented. As a result, analysts had to build their models on datasets full of gaps, leading to forecasts that were highly localized.
This level of approximation created real challenges when it came to enforcing hedging or insurance claims. A storm could strike a crop 50 km away from the nearest weather station without being detected, thereby depriving the insured party of compensation. Under such conditions, developing a market was extremely difficult.
In the 1980s, the widespread adoption of satellites significantly enriched available data, providing a comprehensive view of weather phenomena from space. Naturally, models became more accurate and offered much broader weather coverage on a global scale.
2. Grilled data
Building on these new data sources, the National Centers for Environmental Prediction (NCEP – USA) developed a more standardized and homogeneous system: gridded data.
Instead of relying on scattered weather stations across a map, all available data (stations, satellites, probes, private devices, etc.) are combined to mathematically extrapolate conditions in uncovered areas. This results in far more reliable data and much finer forecasts.
This marked a shift from an imprecise map to a grid with a 210 km resolution in the 1990s, down to 38 km today with CFSR (Climate Forecast System Reanalysis).
On its side, Europe, facing similar needs, developed its own dataset based on the same principle: ERA5.
More comprehensive, it allows weather conditions to be replayed hour by hour since 1940, on a grid with a 31 km resolution. This level of precision made it possible to develop what is now considered the best weather forecasting model available: IFS HRES, which delivers forecasts at a 9 km resolution.
This is the current gold standard in weather forecasting.
3. Zeus
Leveraging the capabilities offered by Bittensor, Zeus miners managed to outperform IFS HRES forecasts last November.
To go even further and deliver increasingly precise forecasts, they partnered with WeatherXM to collect weather data from ten thousands of weather stations across the globe, thereby enriching their model. You can track the network deployment here :
To strengthen this virtuous loop, Zeus also plans to deploy new stations in undercovered areas, improving forecasts and providing highly precise data to financiers seeking to hedge their activities as close to reality as possible.
No more approximations over broad regions, Zeus takes the existing model and fills its gaps to deliver a tailored product.
III – A step toward the predictive market
And customization is exactly what the market demands to gain efficiency.
With more accurate and accessible data, as Zeus provides, it is easy to imagine the weather market modernizing, shifting from OTC contracts reserved for companies and funds able to afford costly, lengthy, and complex analyses, to prediction markets like Polymarket accessible to everyone.
While Zeus currently focuses on energy suppliers, this represents a true revolution for the weather market, which affects numerous sectors and will play a crucial role in mitigating the effects of climate change in the future.
In doing so, Zeus proudly extends Bittensor’s vision into a space very different from the generative AIs we’re used to. Given the growth of this market and Zeus’s capabilities, we may well be witnessing the emergence of a new decentralized standard.
The advantage of building this solution on Bittensor is that Zeus can easily leverage other network expertise, as it already does with Chutes.
So why not imagine a future where weather is captured by Score’s vision model, analyzed by Zeus, feeding Almanac’s forecasts, and traded on Cartha?
