OP is correct that inflation tends to make it easier to pay off debts (assuming the inflation rate is above the interest rate). To the extent that BTC "wealth" encourages people to spend more, this does have some upward price pressure. As others have said and the latest US infrastructure bill proposes, taxing crypto gains generates revenue for the government which can be used to pay off debt (or more likely, just enable more government spending)

I used to be concerned about (government) financial debts, but have come to realize that for each dollar a person, government or entity is in debt another person/entity is owed, so Net Zero in terms of assets/wealth. Yes, one of the parties may end up worse off or better off, but overall, there will be the same amount of net assets-liabilities regardless of if the debt is payed off or not.

Environmental Deficits are much more concerning. I.e. if your family/village/etc. is 100% reliant on your well for water and you consume water at 110% of the recharge rate from rain, etc. then your are running a 10% yearly deficit and will eventually run out of water.

I should note that debts/money creation/monetary policy can have effects on human behavior, but real wealth is created and destroyed by how efficiently and effectively we build and utilize things of value, like a home, while minimizing resource destruction.

I think bitcoin is great in that it has opened up the idea of a different monetary system, but I don't see bitcoin effectively incorporating environmental assets and deficits into its system. Perhaps a future currency will more effectively recognize that things like the Amazon rain forest maintains biodiversity and work as a carbon sink which helps make the planet more liveable for humans, thus making us more wealthy in the long run.