This is a plot of Difficulty and a 2-month moving average of MtGox USD over time.
As you can see, they move in sync. The covariance is .98 (1.00 is perfectly in sync)
Which makes sense. The higher the cost of BTC, the higher the return from mining. Which increases the compute power entering mining. which increases the Difficulty.
When BTC drops, mining returns drop, compute power exits mining, and Difficulty reduces.
So Benson, when you use Difficulty increasing 10% per jump, there's a underlying assumption of BTC price rising around 10% every couple of weeks.
I think this is too narrow a range to consider. You should consider at least 3 price regimes:
- BTC stays about the same price it is now, say increasing only about 5% in the next 6 months.
Closing at about $135 in December 2013. Difficulty will be about 12,000,000
- BTC goes through the roof. Closing at about $500 in December 2013. Difficulty about 50,000,000
- BTC crashes. Closing at about $20 in December 2013. Difficulty will drop to about 5,000,000
Just my 2 satoshi...
very nice, thanks