New mining pool imposes KYC and censorship

[witcher_sense]

How about if the government enacts a law or an order that forces the large miners to use a pool that is compliant under government standards or the licenses of the miners will be revoked?

It is important to note that, more often than not, different governments pursue different ends. These goals may or may not contradict the ones of other governments. Never in history, there has been an occasion when all governments have conspired to fight something.

No matter how severe the threat is or advanced the technology is, there will always be some governments that make use of it to outcompete others. Governments that allow bitcoin mining and the bitcoin economy to develop will soon outcompete those who do not.

[tromp]

No rational player will ever join a mining pool that deliberately tends to decrease the revenue of the miners.

But imagine the KYC pool offering *negative* pool fee rates. I.e.they will subsidize any miner in their pool.
Then all rational miners, at least those that particularly value their anonymity, will flock to that pool, censorship be damned.

So they may well acquire a majority of hashrate, with an ability to orphan any block from other pools that included a censored transaction. They will just have to pay dearly for this ability...

[mk4]

Bitcoin supports anonymity so where are they getting their idea from?

I don't have the data to back this up, but I'm pretty sure it's because of government regulations. No sane business would require AML/KYC just because they want to(especially in the cryptocurrency industry), because obviously AML/KYC would cause the business to lose customers. It's the same reason people have shat on ShapeShift in the past even though they were just forced require AML/KYC.

[Karartma1]

I remember similar discussions when exchanges around the globe started rolling out KYC/AML procedures. Most of the people here said, yeah no problem, we will keep on buying on localbitcoins and keep using no-kyc exchanges. Then we ended up having most of the trades/volumes on KYC exchanges.
All this to say that the menace is real and I agree with what Fluffypony wrote on Twitter: "It’s only a matter of time till most Bitcoin mining pools are forced to do this transaction filtering. Might be time to dust off p2pool + focus on Stratum v2 support for pools. Also worth noting that adding more privacy to Bitcoin would prevent this."
It's never too late, until it is.

[pooya87]

No rational player will ever join a mining pool that deliberately tends to decrease the revenue of the miners.

But imagine the KYC pool offering *negative* pool fee rates. I.e.they will subsidize any miner in their pool.
Then all rational miners, at least those that particularly value their anonymity, will flock to that pool, censorship be damned.

So they may well acquire a majority of hashrate, with an ability to orphan any block from other pools that included a censored transaction. They will just have to pay dearly for this ability...

any "rational miner" knows that something this malicious has the potential to crash the bitcoin market which means the block rewards they receive + any additional money they may receive is going to be worth a lot less at a lower bitcoin price.
not to mention that as i said before such malicious acts will force the bitcoin network to switch to another algorithm specially if a 51% attack became possible. that means all their investment would worth 0.

you see, the incentive will always force miners to remain honest and makes it so that there are always more honest miners (more hashrate) than dishonest ones.

[leea-1334]

Hmm,,, so next time if ever anyone wants to get into the mining business then they are going to have to identify themselves. I guess it does not really matter in the end since they will only be joining a pool and not actually doing their own nodes. Or can you still make your own validating node and join a pool?

[Gibreil]

Hmm,,, so next time if ever anyone wants to get into the mining business then they are going to have to identify themselves. I guess it does not really matter in the end since they will only be joining a pool and not actually doing their own nodes. Or can you still make your own validating node and join a pool?

That is not good for miners. It is obviously want to break the anonymity imposed by cryptocurrency. I am pretty sure that miners will no longer join to their pool since there are also mining pool that neglects kyc and censorship. Mining business is what I want to join someday, I just save my money in buying rigs but if it this will happen, I am no longer interested to it.

[Wind_FURY]

This is very concerning news.

I personally don't think so. If a certain mining pool imposes KYC, then what's stopping miners from hopping to a different pool that doesn't impose KYC? Seems simple enough to me. Or am I missing something here?

I believe OP is right. Although it's not "immediately concerning", it's still an attack vector against the network, because it's open to the possbility that KYC-pools could get more than 50% of the hashing power.

[witcher_sense]

But imagine the KYC pool offering *negative* pool fee rates. I.e.they will subsidize any miner in their pool.
Then all rational miners, at least those that particularly value their anonymity, will flock to that pool, censorship be damned.

So they may well acquire a majority of hashrate, with an ability to orphan any block from other pools that included a censored transaction. They will just have to pay dearly for this ability...

In other words, what would happen if the majority of miners would be bribed by a dishonest pool to undermine the network? In this case, miners will lose their potential income and get nothing in return. A malicious mining pool, by its nature, is a hostile entity; people who will be joining such a pool are either also malicious actors or maybe don't care about the future of the network.

[mk4]

I believe OP is right. Although it's not "immediately concerning", it's still an attack vector against the network, because it's open to the possbility that KYC-pools could get more than 50% of the hashing power.

It's not like this specific mining pool is the only pool that has a theoretical chance of reaching 50%. Heck, this Blockseer thing is apparently just a new mining pool that's not even named on Coin.Dance as it's most likely a really really small minority pool, and I see it staying that way as it's quite safe to assume that miners wouldn't want to unnecessarily submit KYC.

[bbc.reporter]

How about if the government enacts a law or an order that forces the large miners to use a pool that is compliant under government standards or the licenses of the miners will be revoked?

It is important to note that, more often than not, different governments pursue different ends. These goals may or may not contradict the ones of other governments. Never in history, there has been an occasion when all governments have conspired to fight something.

No matter how severe the threat is or advanced the technology is, there will always be some governments that make use of it to outcompete others. Governments that allow bitcoin mining and the bitcoin economy to develop will soon outcompete those who do not.

Similar to my speculation, your argument is also only a speculation. I respect all the replies that have disagreed with me, however, as @exstaise would say, let us agree to disagree. But let us leave this an open argument because the situation might come and become more serious than our small arguments.

[Karartma1]

Interesting discussion here and it seems to me that what BlockSeer is trying to achieve is to push the boundaries as far as they possibly can. In other words, they're stretching their comfort zone to understand how far they can go with this KYC/censored mining pool. Whatever you think of it this is already an attack on the network. Some of you argued that due to the force of game theory and economic incentives miners will stay honest and avoid such pools which would be anti-economic. This doesn't eliminate the fact that these pools could be easily subsidized by agencies, governments for doing this work. There's more than meets the eye here.

[Wind_FURY]

Shower thought. If miners are incentivized/coerced, and/or threatened to start mining for KYC-pools, and get more than 50% of the hashing power, the KYC-pools-cartel would have the power to CENSOR non-KYC-pool blocks. It would be a consensus rule.

Then Bitcoin has truly failed.

[bbc.reporter]

Interesting discussion here and it seems to me that what BlockSeer is trying to achieve is to push the boundaries as far as they possibly can. In other words, they're stretching their comfort zone to understand how far they can go with this KYC/censored mining pool. Whatever you think of it this is already an attack on the network. Some of you argued that due to the force of game theory and economic incentives miners will stay honest and avoid such pools which would be anti-economic. This doesn't eliminate the fact that these pools could be easily subsidized by agencies, governments for doing this work. There's more than meets the eye here.

The skeptical me is thinking that this might be another attempt by the government to threaten bitcoin by pressuring those who are behind in processing the transactions.

Wait for news about the government taking down a mining pool's domain. That would be the first sign.

[MusaMohamed]

It is my skeptical to think types of miners will join he censored mining pool and do KYC?

If they are investors of that pool by investment ticket (PONZI) it can be understandable and they accept all risks to take the profit that they hope they will receive.
If they are professional miners, they don't join the ugly pool.
Small mining pool with not enough hashrate will not bring block rewards to miner and less rewards for their works than big mining pools.

[20kevin20]

any mining pool that starts censoring transactions will abandoned be immediately by the miners that connect to it.

Are you that sure people care? If exchanges thrive using KYC, why would mining pools not do so if the gov wants KYC with pools as well?

I personally don't think so. If a certain mining pool imposes KYC, then what's stopping miners from hopping to a different pool that doesn't impose KYC? Seems simple enough to me. Or am I missing something here?

Well, you're missing the fact that a lot of people actually prefer to be law-abiding rather than rebel and risk something, and the gov including all mining pools in the KYC bucket is just a very small step away. Miners make money, and if US does that, it'd get to the point where this activity would be a risk if you don't provide your identity.

[witcher_sense]

Are you that sure people care? If exchanges thrive using KYC, why would mining pools not do so if the gov wants KYC with pools as well?

The question is should we care about the people who don't care about bitcoin, who don't know how bitcoin works, who failed to comprehend its significance, who sold privacy for safety, who are seeking only for profits and nothing else?

Well, you're missing the fact that a lot of people actually prefer to be law-abiding rather than rebel and risk something, and the gov including all mining pools in the KYC bucket is just a very small step away. Miners make money, and if US does that, it'd get to the point where this activity would be a risk if you don't provide your identity.

You are missing the fact that there is a big difference between being a law-abiding person and being a blind follower of everything governments coerce you to do. It goes without saying that governments will never allow you to have your own money, to freely transact with anyone in the world, to escape surveillance, to claim your privacy rights, to use open-source software and encryption. You are a rebel if you want all these things, are you not? Or you are a rational law-abiding person who knows his rights, who wants to defend them, who don't want to be enslaved by all these immoral procedures and inhumane laws? Personally, I see no difference between a rebel and a rational law-abiding person. Both abide by only those laws which don't contradict human nature.

Concerning mining in the US, it is by no means right to demand performing KYC procedures from those who pay for electricity to solve math problems. I thought the US was a free country... Okay. How can we resist governments and prove that bitcoin is actually censorship-resistant? You claim that US pools are seeking only for profits, and their tendency to being compliant will help them to achieve their goal. The only thing we can do is to show that the model of compliant pools and miners doesn't work: it is unprofitable and irrelevant. As long as such pools have less than 51% hash rate, other miners, who are still honest, should decline their blocks.

[687_2]

Does anyone know the IP address of the node(s) they use? It would be nice to add this to the default banlist in bitcoin core.

https://twitter.com/dmgblockchain/status/1327037069340774400

[stompix]

i can't even find this pool among the list of bitcoin mining pools!

They are indeed insignificant compared to all the other pools but there is a little tiny difference, they own the gear they have.
Blockseer is DMG solutions, the ones that partnered (and failed) to create that huge mining farm in texas with Bitmain but they did keep about 15k miners and purchased two batches of newer 1000 pieces, possible s17 lately.

Anyhow, till now there is no real danger, unless some morons decide to go Venezuela's way, KYC the miners, and forcing them to mine at a specified pool. Then things might get complicated, but I don't see anything like this happening, at least not in the US or Canada.

You claim that US pools are seeking only for profits, and their tendency to being compliant will help them to achieve their goal. The only thing we can do is to show that the model of compliant pools and miners doesn't work: it is unprofitable and irrelevant. As long as such pools have less than 51% hash rate, other miners, who are still honest, should decline their blocks.

There is one little problem.
Even if compliment pools have less than that, they will still be mining blocks, if they refuse transactions that are not "insert stupid term here" we will have a  dramatic decrease in the capacity of the network, and this will lead to a lot of bigger problems.
Let's say that Coinbase will be whitelisted, they will take advantage of this since a few mining pools won't have enough law-abiding transaction to fill their blocks, the fee Coinbases changes will be lower while the competition will have to fight for space in the other blocks, rising fees and making the customers unhappy, at which point more will migrate to Coinbase...and you can picture the outcome.

But it's just a scenario, I give it as many chances of happening as CSW has to guess Satoshi's keys.

[witcher_sense]

There is one little problem.
Even if compliment pools have less than that, they will still be mining blocks,

Great scenario, but let us stop here. The compliant pools won't be mining any blocks; they will be wasting a lot of energy and money for nothing. Honest miners, which in our case means "non-compliant" miners, will know that the previous block was mined by a "compliant" pool and they may well decide to ignore that block and instead build a chain upon a "non-compliant, censorship-resistant block." How many blocks should they decline and ignore to drive out dishonest miners?