Quote from: Raulo on February 21, 2011, 11:24:48 PM

Quote from: casascius on February 21, 2011, 10:49:55 PM

[Value of a BTC will always be related to the cost of power to produce it, since that's directly related to difficulty, which in turn is related to Bitcoin's popularity

Wrong because it is other way round. Difficulty is related to profitability of mining but BTC price is supply and demand on the market. BTC can rise or can drop and difficulty can adjust accordingly.

Nobody knows what the price of BTC will be. Anybody who claims otherwise is either a fool, tries to pump the value of his holdings, or both.

the reason why I believe they are related, is because demand is directly related to the number of people who know about, and care, about Bitcoin.

And so is the number of miners.

If Bitcoin hits the 10 o'clock news, both will rise in step.

Actually, video cards for mining are becoming increasingly rare on the market, most places are sold out of the 5970, or want much more for it when it used to be $500 new. You can hardly even buy it used on eBay for $500 anymore. Lack of supply of GPU's will introduce an exception to the growth-in-lockstep assumption... one which would make mining MORE PROFITABLE