1/ After observing @FTX_Official's new #Bitcoin hash rate futures contracts since their recent launch, I have a few observations below

Definitely not trading advice! https://help.ftx.com/hc/en-us/articles/360043631671-Hashrate-Futures-Specs

2/ Firstly, great work by the @FTX_Official team on launching the first publicly tradable mining related product This is a step towards providing industry participants with the tools required to partially hedge mining operations and speculate on Bitcoin’s hash rate

3/ However, naming it a hash rate product is misleading, as it is really a difficulty product. This is an important distinction as hash rate represents a timely portrayal of mining activity, whereas difficulty levels can lag hash rate by up to 2016 blocks (~2 weeks)

4/ Notice in the below how difficulty adjusts depending on the previous epoch's hash rate levels

5/ This is an important distinction for traders to understand, as the Q32020 contract will likely represent the hash rate from mid-June to mid-September, not July 1 to September 30

6/ Given this, it is foreseeable that the last two weeks plus of the contract become untradable, since once there is a difficulty adjustment after September 16, it is likely that the contracts settlement level is known by traders

7/ Another interesting observation is that I am unsure how well the FTX trading community understands hash rate and difficulty. Based on my estimates, hash rate is set to drop ~16% to under 1.3E13

8/ Yes this is a noisy indicator as evidenced above, but when paired with other indicators since the last difficulty adjustment such as persistent slow block times (~12 mins) and a hash rate of ~90TH/s, I’m pretty confident right now in estimation 2,3 and 4

9/ So unless there are significant expectations that will lead to hash rate becoming cheaper (or a significant BTC price increase), I’m unsure that the average hash rate from mid-June to mid-September will result in an average difficulty of 1.7E13

10/ #Bitcoin ’s hash rate has to be 122 exahashes per second for difficulty to be 1.7E13, since the contract is an average, if it starts with hash rate at 1.3E13, assuming a linear increase, it would need to finish at 2.1E13, or a hash rate of 150 EH/s

11/ Seems unlikely, but I am always wrong with predictions so...

To reiterate again, not investment advice!