Not all whisky is peated. At the current rates, there is enough peat for hundreds of years of whisky production, even if no new peat was formed, and it regrows at around 1mm/year, which is quite sustainable, if we stop using it for power generation.
All of the makers of peated whisky are committed to protecting the peat, as far as I know. And their peat usage is absolutely miniscule compared to its current use in power generation.
I suspect the requirements of the whisky industry for peat are probably pretty tiny - as far as I know its only the smaller higher end distillers that actually burn peat.
Peated whisky is a specialty product, with rather small production scales compared to unpeated Highland and Speyside malts. So yes, it is quite sustainable, given the regrowth rate.
Many years ago when I was a student I had a summer job working in one of the huge industrial scale maltings that supplied quite a few of the popular whisky brands - I can't remember if they produced peated malt but I do remember their analysis lab having gas chromatography equipment for analysing such things.
Peat is a renewable resource, like hardwood forests. It grows, but it is very slow so it's more expensive than other renewable resources. Someone here quoted 1mm/year but in active areas it's closer to 1 inch (26mm)/year
It is quite rare, but not nonexistent. I believe there's only about three to five distilleries who produce or will be producing peated Irish whiskey, at least one of which isn't yet in production at the moment.
> But presumably you could burn other fuel and get a similar result
I'm not so sure about that. Peat smoke has a quite distinctive smell.
All of the makers of peated whisky are committed to protecting the peat, as far as I know. And their peat usage is absolutely miniscule compared to its current use in power generation.
Bruichladdich has a good summary: https://www.bruichladdich.com/faq/is-peat-sustainable/