How do they tell the difference between the last user not returning it, and the bike being stolen with bolt cutters after the last user returned it properly?

Quite heavy and their specific number highly visible.

The lock is nearly unbreakable, a bolt which is locked inside the bike frame. I wouldn’t know of a way to crack this physically without demolishing the bike.

It’s much easier to steal any other bike instead.

I guess the main upside is vastly reduced technical infrastructure costs so you can get over a certain small percentage of stolen bikes after reducing this probability enough.

I would be very surprised if someone can dismantle them on the street. But nevertheless if you have another bike right next to it which is worth more, lighter, faster and easier to crack why even bother?

Combine this with a few anti-theft procedures that don't involve GPS / internet (as commonly used by bikeshare programs in various municipalities) and you've got something that might work.

I also don’t understand how mentioning JSON is even relevant in this thread.

This sort of dispute is probably going to end up in a legal forum at some point. In that case, video footage from a device that's not physically on the bike (and therefore much harder to tamper with) is going to carry much, much, much more weight than GPS traces. Also, you usually know exactly who is supposed to have access to CCTV camera systems / footage, and can therefore have those people make legally binding representations as to their accuracy / fidelity.

(Of course, with regards to this problem, your objective as a service provider is to end up in court as infrequently as possible. You'd be more likely to invest in anti-theft measures so you can get the probability of theft low enough to reasonably write off as part of opex.)