Uh no, cryptocurrencies can't generate USD. But if you meant "dollars" as a generic term for currency, then sure, kinda yeah, to the degree that cryptocurrencies are actually working as currencies (which they mostly are not).
Anyway, the "deflationary" claim is internal to a cryptocurrency. Nobody is asserting that cryptocurrencies cause deflation of USD.
If I buy crypto from a miner, the dollars don't disappear. The miner uses it to buy energy and semiconductors, which makes its way around the econony until some miniscule fraction of it comes back to me. (The loss of assets in the economy needed to create the transaction does not destroy dollars, but it does destroy finite resources such as fuel or sunlight for energy, the time of the people involved in the supply chain, etc. In that sense, buying crypto generates USD: we end the process having completed the reaction
Dollars + fuel/energy/resources + time -> Dollars + Crypto
So if one values crypto more than fuel/energy/resouces + time (say, because crypto is deflationary and its value will rise faster than that of the natural resources used to create it, then it does look (if you squint at it) like dollars are generated: the crypto can be sold later for more than the dollars.
At the individual level, the transaction might be even more biased: dollars -> crypto now looks a lot like it generates dollars later if dollars are inflationary and crypto is deflationary (with stable demand for crypto).
If a single dollar gets pushed around a small economy a thousand times in a day, it is facilitating economic activity, but that doesn't increase or decrease the money supply.
Maybe a lost cause?