Haven’t watched the video, but sounds like he’s making a scrape. Rabbits do this to make a little cozy spot for them, typically with raised edges. It’s a common behavior, typically done on beds and blankets usually.

Yes that’s normal digging behavior but it can be super annoying when they do it in the litter box! A few months after we got Thor she learned to dig out her litter box Solution is a litter box with a screen. Here’s a picture of Thor’s box

It’s handy because they poop on top of the screen and you can just lift it off and dump for easy cleaning. 

Another note is that shredded paper isn’t the best for litter as you have discovered! I’m a big advocate of wood stove pellets for bunny litter. This is also sometimes known as equine pellets, or compressed pine pellets. You can buy it at many hardware and farm stores for just $6 for a 40lb bag! A similar product that is more pricy but can be found at pet stores is feline pine