This is actually a misleading error message: what's happening is that
GRUB's btrfs implementation doesn't implement the file read hook
interface for returning blocklists to calling code.  I posted to grub-
devel about this and the upstream maintainer pointed out that, even
aside from multi-device problems, writing to btrfs from GRUB is
fundamentally risky because:

 * the same block may be used by multiple snapshots
 * every tree which uses a given block will contain its checksum, and so on 
recursively

However, btrfs reserves space at the start for the boot loader. This
space is more than GRUB needs to embed itself, and so we could use 1KB
of it for an environment block.

In any case, this is not a new problem that arose from using subvolumes,
nor does it prevent booting (you get a spurious "Press any key to
continue" prompt, but if you just ignore it it'll boot anyway).
Downgrading to wishlist.

** Changed in: grub2 (Ubuntu)
   Importance: Medium => Wishlist

** Changed in: grub2 (Ubuntu)
       Status: Confirmed => Triaged

** Summary changed:

- boot error: sparse file not allowed
+ environment block not implemented on btrfs

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https://bugs.launchpad.net/bugs/736743

Title:
  environment block not implemented on btrfs

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