Crypto Censorship? Analysis Suggests Selective Transaction Filtering in Bitcoin Mining

A troubling trend in the Bitcoin network has been revealed by a recent 0xB10C analysis, pointing to possible censorship by large mining pools. The results, which were laid out in a comprehensive report, concentrated on six transactions connected to addresses that the Office of Foreign Assets Control (OFAC) of the U.S. Department of Treasury had sanctioned.

0xB10C’s miningpool-observer noticed an odd pattern in September and October 2023: six blocks had no transactions that were reported by OFAC. Interestingly, similar omissions were found in blocks mined by well-known pools, such as F2pool, Foundry USA, and Viabtc.

The goal of the research was to ascertain whether the missing transactions were caused by deliberate filtering or by unintentional variables like propagation delays and transaction costs. The study comes to the conclusion that Foundry USA and Viabtc most likely encountered “false positives,” implying inadvertent omissions. F2pool’s case, however, told a different story.

Following careful examination, 0xB10C concluded that F2pool had purposefully excluded these transactions, suggesting that it was in compliance with US OFAC prohibitions. This deviation from mining pools’ expected norm of transaction inclusion raises important concerns regarding the decentralized character of the Bitcoin network.

The Complexity Unveiled, Understanding Transaction Selection

0xB10C’s analysis delved into the intricate details of transaction sizes, fees, and block space allocation. The developer emphasized the autonomy of mining pools, stating, “Each node has its own set of valid transactions. A pool might also prioritize transactions for which it received an out-of-band payment. However, it might also deprioritize or filter transactions.”

This disclosure emphasizes how intricate the process of choosing a transaction is inside the Bitcoin network. Although Foundry USA and Viabtc were guilty of unintentional mistakes, F2pool’s intentional filtering raises questions about censorship resistance.

Beyond specific mining pools, our analysis raises important issues regarding the decentralization and censorship resilience of the Bitcoin network as a whole. Even while one pool’s activities might not immediately threaten the stability of the network, they establish a precedent that needs to be taken seriously.

0xB10C highlighted how important it is to keep an eye on mining pools’ transaction selection procedures in order to maintain the core values of the Bitcoin network. The developer pointed out that eventually, all transactions flagged by OFAC were “picked up by other miners,” demonstrating the network’s resiliency, even in spite of F2pool’s filtration. Continuous monitoring is necessary to preserve the integrity of this decentralized financial system as the crypto environment changes.