The hole in your theory is that a rational miner may think the price will multiply by 100 (for example), so buying $1000 mining equipment will be profitable because it will yield $700 worth of BTC (70% figure estimated from nothing and is really an arbitrary number as long as it is less than 100%), which will eventually be $70,000. The problem is that buying $1000 worth of bitcoins would yeild $100,000 in a $1000 investment rather than $70,000 in a $1000 investment.
The real reasons people continue to mine are one or more of these:
-It is fun
-It secures the network
-They wrongly think they will make a profit
That's not rational though. There's been no rational reason to think bitcoin can yield those returns. You're talking about a 10000% return on investment.
There is no investment in human history that works like that.
ummm, well bitcoin has done that. At one point you could get a thousand bitcoins for a $1 then it was 1 bitcoin for a $1000. So a return like that is possible and it has been possible in the last 4 years.
I am not saying it is rational I am just saying you are wrong :)
Bitcoin has gone up 1000% every year, and 10,000% last year.
Also, every successful startup ever has had those kinds of returns at some point. So I suspect you are only considering traditional or stable investments, like post IPO stock or whatever.
The real reasons people continue to mine are one or more of these: -It is fun -It secures the network -They wrongly think they will make a profit