BTC Difficulty Adjustment

Good morning. Back to the topic of Hash-Power and Difficulty. We saw a spike in Hash-power in late May and into June, following the prevailing BTC rally. This morning, the difficulty has adjusted slightly lower to 9,013,786,945,891, down -0.56% from 9,064,159,826,491.

On June 27th, we wrote our BitOoda BTC Difficulty Swap trade recap, and this morning the second leg of that trade has settled. As a refresher, here are the trade details from last month:

BitOoda BTC Difficulty Swap
D+2 (7/11/2019) TRADES 8.3 T 20x Contracts
D+3 (7/25/2019) TRADES 8.7 T 20x Contracts

As you can see above, the D+3 swap traded 8.7 T, or 8,700,000,000,000 for a total of 20 contracts. To give you a better understanding of the size of this trade, the PNL calculation goes as follows:

The final goal for this specific product is two-fold. The first is to have an automated settlement process as soon as difficulty adjusts using a preferred and reliable ORACLE that can plug into a settlement platform. The second is that this same settlement platform can hold collateral for margin and minimize the credit risk between two counterparties. This can allow a trader to net his position (open and closed contracts) between separate counterparties in a much safer way from a credit standpoint. With these two processes in place, we believe we can massively increase the liquidity and trading opportunity of this difficulty market.

We have deliberately sequenced the BitOoda BTC Difficulty Swap for this end game. In the latest iteration of this trade, we were able to ‘settle’ the PNL through our strategic partnership at Tagomi. Simply put, the PNL was transferred from the Tagomi Account of Client A to the Tagomi Account of Client B.

We are working on the next steps forward as we aim towards complete automation of this trade cycle, and will keep our readers posted on that progress.

As always, we are looking for more liquidity in this product and love to hear your feedback or comments on this structured product.

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