Hello there! This is a known bug and there have been quite a few bug reports (e.g Pasted images now doesnt show by default) about this same issue - do you want to merge this issue into the existing ones or close this?
It is irritating, but there is a way you can use to make the pasted image be displayed like a picture - click the thtee-dot icon next to the Block, then select “Display as embed” instead of “Display as link” in the Appearance section. More info here: Copy/Pasting an Image into a block results in 0 byte object that does not open