Given the rapidly rising difficulty level and electricity consumption/$30 cost per transaction, is the protocol sustainable as-is, and if not what is most likely to happen in the evolution of BTC.
As Bitcoin expands there will be much greater numbers of transactions while the cost of maintaining the network will remain relatively constant, if not decrease, as power-inefficient GPUs and higher consumption ASICs are replaced by more efficient ASICs. The cost per transaction will thus drop.
Also, keep in mind that it isn't replacing nothing, it's replacing centralized accounting which has a significant cost per transaction.
Reducing the number of miners will reduce the cost/transaction. As the reward decreases the number of miners will also decrease. In the near term (2-4 years) ASIC increases in speed and reduction in power will stabilize. As mining becomes less profitable there will be fewer people mining thus stabilizing the transaction cost.
One needs to look at BTC from the standpoint of a currency, not from the standpoint of a miner--looking to get rich mining.
Yeah, I mine.
It appears to me that electricity costs to mine blocks are rising at an unsustainable rate. Charts of difficulty and network hashes are growing exponentially. This is unsustainable. Currently miners generate revenue of approx. $30 on every transaction. Who pays for this? BTC holders, that's who. (Source: Blockchain.info charts) While it appears that fees we pay to transact are low, we actually pay this much higher amount mainly through inflation right now, due to mining of new BTC.
The big claim in favor of protocol sustainability is that the market will find a balance at the right transaction fee level. I would argue that already it is being shown that effective transaction fees (mining inflation + fees) are too high - mainly because of the underlying costs of producing blocks, of which electricity is a growing component. An unsustainably growing component. And that the low fees we pay to transact are actually an illusion hiding the real costs simply because so much investment money is flowing into the illiquid BTC base, preventing the inflation effect that would otherwise reduce the BTC price being so apparent.