Crypto Derivatives Exchange FTX Launches Bitcoin Hashrate Futures

On Friday, cryptocurrency derivatives exchange FTX launched a hashrate futures tool that allows Bitcoin (BTC) miners to hedge against mining difficulty risk.

Hashrate, the amount of processing power dedicated to a Bitcoin network at a given time, determines the strength and security of the network.

FTX leverages mining difficulty, that is, the complexity of solving equations that validate bitcoin transactions.

According to the exchange, such a method is necessary because it is impossible to determine exact hashrate, beyond approximating it from block times and difficulty.

The futures product that went live on May 15, 2020, determines the hashrate by calculating the average difficulty of a Bitcoin network every day throughout the quarter.

Since “difficulty adjustments attempt to maintain 10m block times, over long periods of time the average hashrate will be proportional to the average difficulty. So that means that, roughly speaking, difficulty futures should behave similarly to…