This is not a system fault, it is a problem that began with IOS 14.2 and causes the same problem in other iPhone models. I have spent about 80 hours on the phone with Apple Support since November. It begins spinning when you use Dictation aka talk to text.
In fact, last Wednesday, I was once again on the phone with Apple Support regarding my iPhone SE 2020. During the call, I upgraded my mom's iPhone 7 from IOS 14.1 to 14.4. After upgrading the software past 14.1, her iPhone started spinning, just like it does on my iPhone SE 2020. I turned Dictation off, restarted the phone, the spinning stopped and has never returned.
I believe this spinning wheel issue only effects iPhones with the older design body with the round home button at the bottom.