You need a more complex model. There are more than two quantities, and the connections between them aren't linear.
I didn't say it was linear, constant, or that there were only two quantities:
In the end, it's just a lagging indicator of price, just with some extra factors thrown in ($/kW, MH/J, miners' inertia to start or stop mining, available MHps offline after a price drop, the $/MHps for new hardware)
Those are the major current ones, but more could be added.
What happened to the lag?
That's why I list "available MHps offline after a price drop" as an input.
Like ol' Ludwig said, your graph shows a unique historical fact, not an eternal principle.
My chart shows that a relationship exists. I claim that price is
one variable that feeds forward into difficulty, not that it's a simple linear relationship. I do not claim it's an eternal principle. Quit trying to spin it like I am.
...
And you're entirely missing the point. Here's what started this whole thing:
Try computing the value using difficulty as one of the variables. Prices at the moon are only justified if difficulty follows. When it doesn't, there are spikes in the price:difficulty ratio, and it stays grounded at realistic prices.
bitcoinBull thinks I should be using difficulty to compute price.
All I'm saying is is that there are both logical reasons and rough empirical evidence showing that price feeds forward into difficulty (not that it's the only factor; not that it's an eternal principle; not that it's a linear relationship; simply that it's one variable that feeds forward) - that there is some kind of causal relationship in that direction.
... But that
I don't see any evidence that difficulty has any predictive power for price, and I don't see any logical reason why it should be a significant variable in an idealized formula for fundamental price.
And I'm asking why he thinks it should be.