It’s been a year since the last fork of bitcoin, and the community can finally reap some of the benefits of the hard fork. An important element of this fork was the activation of segregated witness — the process of converting the last 20% of the blockchain to a new type of blockchain, using smart contracts to activate and enforce the new ruleset of the blockchain.

As Bitcoin mining difficulty has risen over the last few months, there has been an increasing call to make it easier for Bitcoin traders to hedge Bitcoin price movements. In response to this, the Danish exchange Bitsquare has launched a number of new futures contracts offering exposure to Bitcoin mining difficulty.

Recent months have seen a raft of new DeFi futures contracts hit the market. These contracts are betting on Bitcoin mining difficulty increasing, or on the price of Bitcoin declining. The contracts offer traders the chance to capitalize on market sentiment. As the difficulty of mining Bitcoin rises, the difficulty of generating a profit increases as well. Some of these instruments are designed to hedge against this risk.

New DeFi futures to enable hedging against Bitcoin mining difficulty


Exchange of decentralized derivatives SynFutures has launched Bitcoin (BTC) Hash Rate Futures, a new product that utilizes the largest cryptocurrency’s constantly changing mining difficulty as a foundation for opening long or short bets. 

SynFutures’ new product, dubbed completely decentralized hash rate futures, would allow customers to bet on Bitcoin mining difficulty using wrapped BTC (WBTC). 

Hash rate and mining difficulty are two fundamental aspects of Bitcoin that have grown in popularity as a result of the migration of miners after China’s crackdown. To keep up with the Bitcoin hash rate — the amount of computer power devoted to mining — the Bitcoin network needs mining difficulty to be adjusted every 2,016 blocks.

This two-way system, as detailed by Cointelegraph, maintains a consistent block time, or the time it takes to discover each new block when mining Bitcoin. 

SynFutures created the Hash Rate Futures, which are currently in closed alpha, by creating an oracle to verify Bitcoin block headers directly and extract the mining difficulty, according to the announcement. For a difficulty resetting period at a particular difficulty level, each futures contract reflects the anticipated block mining payout in BTC.

Miners may short Hash Rate Futures to hedge against the danger of increasing mining difficulty, or long energy futures to estimate the cost of power.

Related: Everything You Need to Know About Bitcoin Mining

Rachel Lin, the founder and CEO of SynFutures, said that the company intended to provide traders the ability to hedge against all of the variables that influence their mining profits. She continued, “

“Until now, there hasn’t been a derivatives product that targets mining difficulty, which is critical for miners to predict how much profit their rigs will produce. We’re bridging the gap for miners with Hash Rate Futures.”

SynFutures completed a $14 million Series A financing round last month, headed by Polychain Capital and backed by a slew of notable crypto investors, including Pantera Capital, Framework, and Wintermute.

Not too long ago, the folks at CoinShares announced the release of new Ethereum Futures products that aim to bring price stability to this volatile asset class.. Read more about hash future and let us know what you think.

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