EDIT: The solution below worked only temporarily; the problem started again after a while. I ended up moving to iCloud and cancelling my DropBox plan. I’m keeping this post as a reference only.
Dropbox is a cloud-based storage service that has become increasingly popular in recent years. However, if you are a Mac user, you may have experienced performance issues with Dropbox. I had a DropBox performance problem on my Mac. The desktop app was using 100% CPU all the time, causing the fans to spin like crazy – even when it didn’t have anything to sync.
Many others complain about the same issue on the forums, and no mentioned suggestion seemed to solve the problem.
But I did.
In my case, the cause of the problem was an incompatibility between DropBox and Time Machine. Both were accessing my “Documents” folder.
Here are the steps I followed.
Pause Time Machine
Self-explanatory. You don’t want the apps to fight while you are fixing stuff.
Remove full size option from DropBox
If you are using the SmartSync feature of DropBox and keep some of your files cloud-only, DropBox gives you two options. You can either make Finder think that a smart-synced file is still on the disk and occupy (for example) 2 GB’s of space, or you can make it be honest and show that it is occupying 0 bytes.
Apparently, the former approach is causing the incompatibility. Therefore, I went to dropbox.com and set the option to make files (honestly) look like 0 bytes.

After that change, restart DropBox or your Mac, and let DropBox organize your disk accordingly. Wait until it stops syncing.
Pause DropBox
Now, it is time for DropBox to pause and give Time Machine some space.
Reset Time Machine
Erase / re-partition your Time Machine backup disk, and set the clean disk as your new Time Machine target. Let Time Machine complete the initial backup.
Back to normal
Now that both DropBox and Time Machine have finished their tasks, you can let them run simultaneously. On the initial resume, DropBox will catch & sync the latest changes caused by Time Machine, but that’s the last time it gave my CPU a hard time.
After the initial big sync, DropBox returned to normal.
Note that this approach also solved my “Not enough space” Time Machine problem.
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