> In Bitcoin you don't generate cash, you earn block rewards for acting as a consensus broker which otherwise would require a central banking settlement layer. This activity, tied directly to the transaction layer, acts to maintain the equilibrium between increases in goods and services and expansion of the money supply.

Block rewards have no connection to transaction volume or economic activity, the protocol is designed such that bitcoin supply increases at a predictable (and diminishing) rate. Bitcoin is deflationary by design, which is one of the major issues that stopped it from becoming anything other than a speculative store of value.

Yes, they absolutely do. That's what dictates difficulty. It is not deflationary, deflation is not the same as supply constraint. Deflation is a reduction in price level, constraining supply is precisely how it moderates the equilibrium of value which is why it is a threat to existing monetary control.