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June 18, 2011, 01:20:00 PM |
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What you wrote doesn't make much sense. Difficulty determinate the lowest exchenge value of bitcoins. Mining not worth => no transactions possible. I also miss how, in your scenario, more ppl will start mining when it will already be unprofittable.
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It's more likely the other way around, the exchange value of bitcoins determines the highest difficulty possible. That would be the point where mining stops being profitable, thus noone would buy new hardware, stopping the difficulty increases.
There are people holding large quantities of bitcoin, either bought at low prices or mined at low difficulties. These people might sell at a price where mining is unprofitable, if they fear a crash for example. Or if they just need the money.
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