We are in year 12 but I do expect to hear this idea more and more and more as rewards shrink and stale addresses grow.
Anything can happen in the future, I sincerely doubt that we will reach a consensus to touch dormant addresses, but even if that happened, the effect of burning or reusing 1M coins won't change the fact of "diminishing returns".
I am not making this up, it's in the chart:
Bitcoin went up from low to high as follows:
55617% (2010-2013)
12700% (2014-2017)
1700% (2018-2021)
For "diminishing returns" theory to be invalidated bitcoin will need to up with at least one of those cycles, meaning, it has to go to $16,000,000 this cycle to stay in line with the 2010-2013 cycle or at least goes to 400k to keep up with 2014-2017 cycle, the first one is out of the question, I hope that nobody expects bitcoin to go to 16M by the end of this cycle, you might debate the 400k is doable but I would bet the house against it, and then even it magically happened, for the next cycle it needs to be above 10M, I honestly don't think that its remotely possible by any means.
So as it stands right now based on the facts that we have before us, the price growth will slow down, the difficulty will also slow down but most likely go up, mining profitability, in the long run, is going to go down, I don't present to know the future, but this has been the case for 10 years and I see no reason as to why it has to change.
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If we pick random dates yeah, of course, we can do it but if we spread that period with 3 months in each direction what will happen?
You picked a peak in price and if we move two months the price goes down to 1/3 , the hashrate simply didn't had time at that point to adjust with the ever-growing price, remember that at the start of the year the price was 1k, dif at 0.3? So to December, it went 20x times in price and 6 times in difficulty.
Ok, if the period I picked didn't work for you, how about 10 years' worth of data?
10 years ago difficulty was 1.5M and the price was $14, 10 years later price is $64,000 and difficulty is 23T, to put that in number digits it's 23,000,000,000,000 now vs 1,500,000 then.
Price went up by 457,042% while difficulty went up by 1,533,333,233% , and thus difficulty outperformed price by 335,390%, you can make of that what you want.
Of course, but who will produce 1000x of the current gear in the next 10 years?
No one, but I should ask you the same question, what will take bitcoin price 50x in the next 10 years?
The price peak was 64k and difficulty was 23T, right? so OP is talking about the difficulty of 46T and price of about 100k, so I think that is possible? very possible, and then in 2023, difficulty sits at 84T and price at 150k? also possible, do I think this can go on forever? of course not and I have said that I agree with your point, but because I know that bitcoin won't be putting 50% up every year, this difficulty doesn't have to put in 100% for OP's projection to be accurate.
If you look at the past data in the right way, I believe these numbers have actually been the case or very close, you can't look at 3k vs 60k and say oh well price went 2000%, the 60k was so brief, even the 19k and the 1.5k before it, you need to work with something like the average yearly price by taking the daily close of all candles within that year and divide it by the number of days in the year.
For example, the average yearly price for the 2017 peak was 2.8k and not 19k, the average of the previous year was 0.5k (( I used 365 daily moving average on trading view to get that), so realistically speaking, the gains of 2017 was merely 460%, you need to compare that against the average difficulty (can't find an easy way to get but it's doable if someone is willing to).
Of course, this can't go on forever, both price and difficulty growth will have to slow down, I can't tell for sure if it's going to be 50% vs 100% or any other ratio, but in the long run, the difficulty will outperform "profitability" assuming price here is somehow irrelevant when another halving hit the place because once the rewards are halved for the next 4 years, the difficulty doesn't need to go up by 100% to keep OP's numbers in check.