There is one problem: mining. Satoshi Nakamoto (whoever he was) once said (
https://bitcointalk.org/index.php?topic=57.msg415#msg415) that "the price of any commodity tends to gravitate toward the production cost" and "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". I agree. Later years are still very far away. Widespread institutional adoption may shift the balance, but without it the price will gravitate toward the mining cost, that is low tens of thousands, for years to come.
Which is why non mining hodlers like difficulty increases. Not only more security, but also higher production cost.
Right. I am not against difficulty increases (my mining days are long gone), but I can hardly imagine a tenfold increase of the current production cost. As I understand, the main constituents are electricity costs and equipment costs (the equipment quickly becomes obsolete and constantly needs to be replaced). The efficiency (hash per joule) continues to increase, so I doubt that the energy consumption can increase significantly. Faster and more efficient equipment is more expensive, but its cost needs to increase faster than difficulty to make the cost of production higher.
Right, but you're forgetting another important factor to the final cost: the amount of competition. If you're the only one left mining, it doesn't really matter how computationally powerful or energetically efficient your rig is: each hour, all 6 blocks will be yours. Competition is what drives the arms race to get more powerful, more efficient gear and ultimately lifts production costs.