To sum up: Miners are getting paid the equivalent of $30 per transaction they process. The sender of the bitcoins only pays $0.04. That means the miners are being subsidized $29.96 from somewhere else per transaction they process. That extra money is coming from what is effectively a tax on the prior owners of Bitcoins. They are not having bitcoins directly taken from their accounts to subsidize the miners, but they instead they are having their current stash of Bitcoins diluted. On average there are about 144 blocks a day (that is 24 hours times 6 blocks an hour) and each block is releasing 25 bitcoins. That means each day 3,600 bitcoins are being created to pay miners. The value of those bitcoins at today's market prices are $1,332,000. The more than 1 million dollars a day being paid to the miners comes from dilution of mine and your bitcoins, effectively taxing us. Now the miners love this, because they are getting paid well, more than a million a day. But what happens when those block rewards keep on halving? They won't be getting paid nearly as much. Will they still want to mine then?
At some point when block fees drop, then fees for senders have to go up. Miners won't mine for free. To me it just doesn't seem sustainable. If miners weren't being subsidized today, then each sender would have to pay a $30 fee. How many people are really going to want to do that? Western Union actually doesn't look so bad then.
I do think PoW has been a truly amazing system and I am very glad it exists and I own a lot of Bitcoin, but the system as it is right now to me doesn't seem sustainable in the long run.
Some kind of different system where people processing blocks don't need to be paid so much seems a much better way to maintain the blockchain to me.
I think you might be slightly confused.
First of all, the "dilution" you speak of happens regardless of the price of Bitcoin, who is mining, how much they are spending on mining, etc.
New bitcoins are being released according to the protocol -- there is a steady, predictable rate of inflation and issuance.
Second, you say it "doesnt seem sustainable", but what are you basing that on? You have to remember that
supply and demand set the price of Bitcoin, and everything else follows. Miners are claiming $1.3M/day in
block subsidies (and the same amount is being spent on security)
because that's how much Bitcoin is worth right now.
Competition is going to make sure that happens.
If the subsidy reward were cut in half today to 12.5 BTC and the price didn't increase,
it would only be $680,000/day. Competition would force some miners out.
The network hashrate and difficulty would drop.
But it would still be enough to secure the network.
Now, if you want to look at the long term and how much the fees would need to be to
support the miners when the block subsidies are gone, then
you need to look at the number of transactions, how big the network will be by
then, and how much security is needed. But you haven't done that -- you haven't
worked out those figures.