How Might Regulatory Focus on Energy Use Impact a Derivative Tied to a PoW-based Cryptocurrency?

Increased regulatory scrutiny on the environmental impact of PoW could lead to policy changes, such as taxes or outright bans on mining. This regulatory risk would increase the perceived volatility and uncertainty of the underlying cryptocurrency.

Consequently, derivatives tied to it, like options, would see higher implied volatility, leading to higher option premiums. The risk of a price crash due to regulation would be priced into the derivative.