Miner Bob has purchased 1 PH/s of mining machine/cloud mining power/mining tokens, and he wishes to lock in the mining reward for 1 May 2021 to 14 May 2021.
Hash Rate Futures maturing on 1 May 2021 (Block height 681408) is trading at futures price of
P = 0.0823 BTC, the implied difficulty at
Bob short sells 1 contract of Hash Rate Futures maturing on 1 May 2021
Let's fast forward to 1 May and block height 681408, and assuming
The actual difficulty resets to
The total mining reward for the 14 day period based on
R, i.e. Bob would get
Rby mining Bitcon for the next 14 days.
Total PnL for Bob on his short position is
Total reward for Bob is fixed at
R -(R-P) = P
That means, Bob has locked in his mining reward at P with his position in Hash Rate Futures, regardless of the actual mining difficulty after reset.