Silly question: What happens to the value of exch if the difficulty decreases at the next period? Shouldn't the value go up?
EXCH is always going to be sold at the NAV/U + 3%. If difficulty decreases, this just means that the Reserve becomes more deficient (there are fewer and fewer funds on hand to pay MINE dividends - the chance of SELL dividends decreases).
If Difficulty increases, MINE will receive a bigger payout per day but it will never received more than the NAV/U (total assets of BDD divided by total number of units). Does that help?