The incentive is to produce proof of work, not energy wasted.

That's why miners use highly specialized and efficient machines and not just any random computer that draws a lot of power.

You cannot have ever been in a room doing mining.

Your phone is highly specialized and efficient. Coin mining is a noise parade and heat monstrosity that grows up to the limit of how much power it can draw at affordable rates.

I have run billion dollar datacenters. They are dwarfed by small mining operations in their heat production and power consumption.

I don't understand how what you said is in disagreement with my claims. Yes, miners try to use their machines as much as possible, like any other business, but they still try to it as efficiently as they can.

Undervolting chips to increase efficiency is quite common, for example.

And my phone is not very specialized at all, when compared to a mining ASIC.

That’s because you stop at the first level instead of exploring the effects of 2nd, 3rd, nth order. Or you do not understand the business side of miners.

Miners make money by generating hashes. The more computing power the more hashing power you have. The value of expected rewards determines how much you will be willing to spend on the mining operation. Let’s say you have a gain of 10% efficiency, meaning you spend 10% less on your expenses while winning the same number of rewards. So what is your incentive? Is it to stay like this and be happy that you saved some energy? Of course not, you will spend these extra 10% to gain more rewards. And now your competition also has to up their game.

By design, the higher Bitcoin price is, the more energy is worth spending on Proof of Work. More efficient hardware doesn’t change that fact. It’s by design not sustainable.

None of what you said is special about mining.

If a factory increases efficiency by 10% it will simply produce more of whatever it makes as long as there's demand for it. And then other factories have to up their game.

Also the higher the price of the product the factory produces, the more it is worth spending extra resources producing it.

And of course this isn't limited to factories, it's true for businesses in general.

What is special about mining is that energy is just about the only resource it uses, so it's more obvious, while a factory might be bottle-necked by other resources like floor space and a software company might be bottle-necked by how many programmers it can hire/manage. Miners are similarly limited by how much mining hardware they have or are capable of managing.