How Can a Miner Use a “Collar” Option Strategy to Hedge Their Cryptocurrency Holdings?

A collar strategy involves simultaneously buying a put option and selling a call option on the cryptocurrency they mine, both with the same expiration date. This strategy establishes a price range (a "collar") for their holdings.

The purchased put option sets a minimum selling price (downside protection), and the sold call option funds the put but limits the maximum profit (upside cap).