How Does a Difficulty Adjustment Affect the ‘Expected Value’ of a Bitcoin Option Contract?

A difficulty adjustment primarily affects the 'Expected Value' of a Bitcoin option indirectly through its impact on miner profitability and the overall market sentiment. A sharp decrease in difficulty, often signaling miner capitulation, might be viewed bearishly, potentially lowering the expected value of Call options.

Conversely, a stable or increasing difficulty, indicating strong network health, can positively influence the long-term price expectation, thus increasing the option's expected value.