My nephew works for the cities utility company. They have recently gotten interested in mining to act as demand sinks....particularly for wind.

If you ever drive by the large wind farms, at any given time you may notice that only 50% of the turbines are spinning. This is because there is only enough demand at that time for X amount of electricity, so they put the brakes on the unneeded ones.

If they have mining equipment, it makes more sense to just always run the turbines and power up/down the miners to sink excess electricity. Its literally free money if the wind is blowing and demand isn't taking the full amount....

I think there is some amount of that happening. To that user, they don't care really about economics of mining since the question is: Do you want $0 or >$0?

We were paying higher fees because no one tried to pay less, I think. From what I understand, people started posting transactions with this fee, and they were accepted naturally until everyone accepted them.

I don't know, and I don't have enough knowledge to pinpoint the starting point, but I understand it was natural. Miners could ignore these transactions, but why ignore them if the mempool was somewhat empty?

I understand that user pressure on their nodes led miners to accept these lower fees; it would be very bad to mine empty blocks.

No. Short answer is time preference was high and we paid the fee to match that.

Yes, but in the end who are you going to complain to about getting your excess fees back. I look back at some of the fees I paid when I first got into Bitcoin in 2017. They were likely from exchanges, but most were tens of thousands of sats.

As I understand 1 sat/vb became standard to stop spam filling up blocks. Now spam is filling up blocks paying as little as possible.

We can't fake it. Bitcoin needs to be used as it was meant to be. People taking custody of their sats.

For large parts of the last three years, there were transactions in the mempool bidding more than 1 s/vB or more. For those periods, the answer is clearly no, because the price was determined by the blockspace market, and not the minimum feerate. Beyond that, I was very surprised that the miners didn’t think their incentives through and went along with mining transactions bidding less than 1 s/vB. It seems to me that they permanently reduced the ceiling of feerate peaks, simply by replacements being incremented in smaller steps. If they had thought it through, and considered how little these fees brought in the big picture, they should not have deviated from the established minimum feerate. If they had not performed this unforced error, no in general as well.

Jargon nit: Block reward = block subsidy + transaction fees

Fees are rarely static... what determines fees?

let's pretend fees 'settle' around 0.4 sats/vB, how many hours or days will that last?

This happened because in my trolling of fake L2 scammers it brought awareness to the fact that the minimum fee is the only ownership scaling lever remaining

You're welcome... unless you believe this ultimately destroys bitcoin- in which case then it was the scammers fault (and the scaling virtue signalers that enable them)

I understand that it was a natural movement of supply and demand. Users entered with the offer of lower fees, and miners met the demand with these fees.