Third-largest Bitcoin mining pool ‘likely’ censored OFAC-sanctioned transactions

One of Bitcoin’s (BTC) core value propositions is it being a censorship-resistance form of money, not subject to arbitrary rule-making. With Bitcoin, anyone who can afford the network fees is supposed to be able to transact permissionlessly.

However, a report from pseudonymous 0xB10C, a Bitcoin developer and owner of miningpool-observer, found data that suggests F2Pool has censored OFAC-sanctioned transactions.

F2Pool is the third-largest Bitcoin mining pool, responsible for 13.7% of all mined blocks in the last 12 months, according to the mempool.space ranking. Essentially, one out of every seven BTC blocks could be mined under a censorship regime if F2Pool actively starts to filter sanctioned transactions.

Bitcoin mining pool ranking and 1-year block discovery. Source: mempool.space

Data suggests F2Pool censored 4 OFAC-sanctioned transactions

In particular, the most recent discoveries shared on November 20 by 0xB10C conclude that F2Pool “likely” intentionally censored four out of six missing OFAC-sanctioned transactions.

Notably, the miningpool.observer identified that a total of six mined blocks had not added an OFAC-sanctioned transaction in September and October 2023.

“One block was mined by the ViaBTC mining pool, another by the Foundry USA pool, and four by F2Pool. An OFAC-sanctioned transaction is a transaction spending from or paying to an address sanctioned by the US Department of the Treasury’s Office of Foreign Assets Control. I maintain a tool to extract a list of OFAC-sanctioned addresses from the Specially Designated Nationals (SDN) list published by the OFAC.”

In the report, 0xB10C interprets both the ViaBTC and Foundry USA missing blocks as a “false-positive” due to several factors. Nevertheless, F2Pool’s four blocks suggest the opposite.

Essentially, data indicates that the block heights 810727, 811791, 811920, and 813357 mined by F2Pool deliberately filtered the OFAC-sanctioned transactions despite having a competitive fee related to all other added transactions.

Update: F2Pool co-founder to disable transaction filtering

The F2Pool co-founder, Chun Wang, posted on X on November 22, informing his Bitcoin mining pool will disable the “transaction filtering patch.”

Will disable the tx filtering patch for now, until the community reaches a more comprehensive consensus on this topic.

According to Wang’s post, the filter will remain disabled “until the community reaches a more comprehensive consensus on the topic.” This confirms that F2Pool intentionally censored OFAC-sanctioned transactions and raises an alarm that it could happen again in the future.