How Can an Options Contract Be Used to Hedge against the Risk of a Difficulty Increase?

A miner can buy a put option on the cryptocurrency to hedge against the expected revenue drop caused by a difficulty increase. The idea is that if the difficulty increases, profitability drops, and the miner is protected by the option's value rising if the price falls, or simply by the ability to sell the mined coins at the strike price.

A more direct hedge would be a difficulty-based derivative, if available.