Bitcoin's game theory accounts for this.

SBR or no, the USG could simply start subsidizing mining if they wanted to gain control of hashrate.

Imagine if there was a pool secretly subsidized by the USG that gave better payouts than other pools.

Seems likely that it could attract more hash than others because it didn't have to compete based on real-world profits. USG can print money and give it to their pool or can threaten violence to its citizens to demand their money (tax them) and subsidize the pool that way. Both things that non government pools can't do.

Govt subsidy of mining is a known threat to miner decentralization.

So, it seems to me that the threat described in the article is not new, just a different mechanism for achieving it.

The defense in both cases is which coin users want.

If there is a USG fork of Bitcoin and most users desire the USG coin over bitcoin, it's hard to see how miners stick with the bitcoin network.

However, if the USG fork does not offer the same value prop (censorship resistant, fixed supply money) it's hard to imagine no one wanting real bitcoin anymore.

If the USG coin isn't a fork but rather just a sustained 51% attack, it seems like the censorship argument comes back into play (ie. with enough censorship the fees for censored transactions rise high enough that hash rate leaves USG pool).

It does feel like it ultimately comes down to a race between how fast the USD devalues through money printing to subsidize mining and how fast the value of censorship resistant bitcoin increases.

Fair. I think this is just about considering failure modes more than it's identifying what's probable. Then again, if SBR succeeds in making the USG even partially solvent, you know they are going to fuck it up spectacularly.