Why on earth does the mining have to use more power than a medium size country as the price rises?
Because the miners get paid with block rewards in bitcoin. As the price of bitcoin rises so does the block reward.
And as long the mining gear produces more rewards than the power to run it costs, it will stay online. And at, say $500K per coin and 12.5BTC/block that would be like $900M rewards/day or ~$330B/year. A large amount of that would be going into paying the electricity bills.
You make an excellent point and in the long run perhaps the mining system may prove flawed.
But I must have missed where in the near term the cost of a bitcoin is anyway related its mining cost?