http://satoshi.nakamotoinstitute.org/posts/bitcointalk/65/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.
... does that spell it out clearly enough for you?
Appealing to authority is a really funny attempt on a bitcoin forum...even Satoshi was wrong on many things, and Bitcoin is so new, that there is literally no theory of explaining how it fits into the traditional theory (it does not). Btw, the quote says it clearly: "...
generation effort is rapidly increasing, suggesting people are estimating the present value to be higher than the current cost of production".
Value/BTC drives up mining expenditure, not the other way around. It is speculation on future market value, that triggers buying asic farms (sinking capital), which they will not turn off. 10% loss is better than 100% loss.
How exactly the "production" of bitcoin can slow down, when the network automatically adjusts to keep the "production" exactly the same average of 10 mins/block??? That is the whole point of the dynamic adjustment, that you can NOT increase or decrease coin generation in the long time/large scale, no matter how many trillion-billion-fillion hashes you add.
We could mine the same coins with 2 laptops. Or we could mine them with turning the Moon into a gigantic ASIC (cooling is kinda cheap in space). They would generate the same amount of coins after the 1st difficulty adjustment.
Also, no. Bitcoin isn't like oil, it is not consumed up. Blockchain space, that might act, as a commodity, that's why there are fees (other than spam prevention).