Traders Can Now Bet on the Bitcoin Mining Difficulty With FTX’s Futures


Cryptocurrency derivatives exchange FTX has announced the launch of Bitcoin Hashrate Futures. According to the announcement, the contracts expire to the average Bitcoin mining difficulty at the end of each quarter. The products are set to help miners hedge against Bitcoin’s difficulty adjustment.

A New Bitcoin Product Goes Live on FTX

Bitcoin Hashrate futures just got launched on FTX, a cryptocurrency exchange whose innovative products such as the presidential and leveraged tokens pushed it to the forefront of the derivatives market.

According to the company’s announcement, the Bitcoin Hashrate futures are contracts that expire to the average Bitcoin mining difficulty over a period of time. This, the company said, means that they represent the total hashpower used to mine Bitcoin.

Launched today, the hashrate futures will start at the beginning of a quarter and expire at the end of the quarter. For example, the Q32020 Hashrate Future will expire to the average difficulty of mining Bitcoin for a period between July and September 2020. 

The current Bitcoin difficulty is 16.10T. The futures will expire at the average of difficulties for the quarter divided by a Trillion.

The Problem of Measuring Hashrate

As Bitcoin’s hashrate is impossible to measure exactly, FTX said it will approximate the data from block times and difficulty. The company explained that given the fact that difficulty adjustments aim to maintain 10-minute block times, the average hashrate over a long period of time, for example, a quarter, will most likely be proportional to the average difficulty.

Therefore, the “difficulty futures” will behave similarly to hashrate futures. 

FTX began looking into futures and options products involving hashrate and Bitcoin dominance back in August last year, after listing its native cryptocurrency the FTT token. So far, the exchange’s plans to dominate the derivatives market have all realized—first with the introduction of the presidential tokens earlier this year, and then after launching innovative products such as oil futures, volatility tokens, and various other leveraged tokens. 

According to data from CoinGecko, FTX is currently the fifth largest derivatives exchange with an 24-hour open interest of over $314 million and over $1 billion in 24-hour volume.

Crypto derivative exchanges ranked by  24-hour open interest

Crypto derivative exchanges ranked by  24-hour open interest. (Source: CoinGecko)

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