To me, it says that MH/J (more efficient hardware) and J/$ (miners finding lower cost power) has increased.  It's a scaling factor for the red line.  It's been increasing over time.  Yes, that means the correlation is not constant or linear.  It'd line up closer in line if we corrected for it, but I don't have hard data to plug in.

Instead, apply a general correction:  take the derivative of each and you'll find they correlate pretty well (fudging for some variable lag).

Here's a log chart so you can see the old data better:



Every bump up in the blue line is followed in about 4 weeks by an increase on the red line.  Drops in blue cause red to flatten, though it doesn't fall easily since a) miners' sunk costs mean they generally stay online during mild drops, and there was a long overshoot in June-July which took a long time to correct; b) MH/J (and other efficiency and mining cost factors) is increasing.

It's also particularly skewed in late 2010 due to the switch from CPU to GPU mining.

None of that is corrected in the charts, which is why I say that price is ONE factor feeding difficulty, not THE factor.



Don't look at low vs high.  Look at rising vs falling.  On the Difficulty side it's more rising a lot vs only rising a little (again, the MH/J skew, among several other factors).



I'm not insulted.  I do appreciate the criticism.  It was just a frustrating distraction since it didn't matter whether I was right or wrong; I just wanted to hear how bitcoinBull's logic went, since I've heard that general theory before and it seemed bizarrely nonsensical.




Oh, I know better than to try to model the market, but I do think my vague hand-waving model is reasonably correct for modeling difficulty - again, using all the factors I mentioned (and a few more, but again, this is all beside the point), not just price.