Analysis Claims Discovery of Selective Transaction Filtering in Bitcoin Mining Pools

A recent analysis by 0xB10C, a developer and onchain analyst, has uncovered intriguing findings in the Bitcoin network. The study, which focuses on the mining pools’ transaction selection processes, revealed that certain transactions from U.S. Treasury-sanctioned addresses were missing from blocks. This insight raises questions about the practices of mining pools and their influence on the network’s censorship-resistant qualities.

Study Highlights Potential Censorship in Bitcoin Network

The investigation by 0xB10C, detailed in a comprehensive report, scrutinized the activity of today’s most prominent bitcoin mining pools. It focused on six specific transactions linked to addresses sanctioned by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).

This analysis is part of a broader project, the developer’s miningpool-observer, aimed at detecting instances where bitcoin mining pools may not include transactions that they could be mining. The findings suggest a pattern of selective transaction filtering, a practice that could have significant implications for the network’s decentralized nature.

In September and October 2023, 0xB10C’s miningpool-observer reported six blocks missing an OFAC-sanctioned transaction. These transactions were notably absent from blocks mined by three different pools: Viabtc, Foundry USA, and F2pool.

The study meticulously analyzed the transaction patterns and block compositions to understand whether these omissions were intentional acts of filtering or coincidental outcomes based on other factors like transaction fees or propagation times.

The report concludes that the missing transactions in blocks mined by Viabtc and Foundry were likely “false positives” and not due to intentional filtering. However, the scenario was different for the transactions missing from F2pool’s blocks.

After a detailed examination, 0xB10C inferred that these transactions were likely filtered out by F2pool. This observation is particularly noteworthy as it marks a deviation from the expected norm of transaction inclusion by mining pools and suggests compliance with U.S. OFAC sanctions.

0xB10C Confirms the Transactions ‘Were All Picked Up by Other Miners’

0xB10C’s analysis delved into the technicalities of transaction sizes, fees, and block space allocation. The developer notes, “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 statement underlines the complexity of transaction selection within the Bitcoin network and the autonomy of mining pools in deciding which transactions to include in their blocks. The implications of the developer’s discovery are significant for the Bitcoin ecosystem.

It raises questions about the extent of decentralization and censorship resistance within the network. While a single pool’s actions may not drastically alter the network’s overall resistance to censorship, it does set a precedent.

The report highlights the importance of ongoing monitoring of mining pools’ transaction selection practices to ensure the integrity and foundational principles of the Bitcoin network. After releasing the report, 0xB10C said that eventually, all of the OFAC-flagged transfers were “picked up by other miners.”

What do you think about 0xB10C’s study? Share your thoughts and opinions about this subject in the comments section below.