Quote from: tmfp143 on September 08, 2012, 06:50:46 PM

Okay, I found this and it helped me to better understand the change in difficulty over time. I understand that difficulty is a function of how many people are mining at a given time, if Bitcoin prices go up, more people want to make a profit, so more people mine. The curve here looks like it started out linearly but has started increasing at a great than linear rate starting around June of 2012.
http://bitcoindifficulty.com/

However, here is the thing that I don't understand, Bitcoin prices have also increased more than linearly during that time, so in theory, a mining operation should become MORE profitable. Wouldn't that make it a more desirable investment? Shouldn't the share pirce go up? Okay, I undertand that difficulty has gone up a lot since June 12, so there is a lot more competition, but I still can't see asny mathematical reason for the share price of any security to go down exponentially when BTC price is going up. If this were the true reason, why hasn't every Mining bond gone down exponentially in price?

I know that I may not get any responses to this. I am not trying to peeve any body off, I would just like honest answers so that I can make informed decisions.
Thanks again!
BLUECHIP

Hi tmfp143,

You are purchasing a fixed amount of Mh/s with each gigamining bond. Mining equipment is priced and purchased in USD. So when the value of bitcoin goes up, a single bitcoin can purchase more mining power in USD. This means mining bonds are effectively short BTC price appreciation.

Best,
gigavps