Sorry, a little off topic, but did  Satoshi really say that? Everything else I see from him has been clear-thinking and concise, but this gets things backwards. It's not that the price of the commodity gravitates towards the (current) production cost so much as the reverse, at least in the case of a commodity like bitcoin. If it costs $200 to produce a bitcoin that sells for $300, then rational investors will buy up more mining equipment to earn that profit. But more miners means divvying up the (fixed rate of supply) bitcoins more, leading to increased production costs per bitcoin.

In principle this would continue until it cost as much to produce a bitcoin as it sold for, accounting for all costs (electricity, personnel, etc.), on average. Of course with the volatility of BTC and the time lag involved in ordering and setting up miners, the relationship has been very loose. But over the long haul it should hold true.

Excellent analysis, xc.

A rational market price for something that is expected to increase in value will already reflect the present value of the expected future increases.  In your head, you do a probability estimate balancing the odds that it keeps increasing.

In the absence of a market to establish the price, NewLibertyStandard's estimate based on production cost is a good guess and a helpful service (thanks).  The price of any commodity tends to gravitate toward the production cost.  If the price is below cost, then production slows down.  If the price is above cost, profit can be made by generating and selling more.  At the same time, the increased production would increase the difficulty, pushing the cost of generating towards the price.

In later years, when new coin generation is a small percentage of the existing supply, market price will dictate the cost of production more than the other way around.

At the moment, generation effort is rapidly increasing, suggesting people are estimating the present value to be higher than the current cost of production.