Marathon is one of the largest bitcoin mining companies in the United States and Canada. It has mined the first OFAC-compliant bitcoin block and only accepts transactions that comply with the government office’s instructions. This caused an uproar in the liberal circle, who believed that this might be the beginning of the censorship of the Bitcoin blockchain at the mining level.

Marathon mined the first OFAC-compliant Bitcoin block

North America-based mining company Marathon has mined the first OFAC-compliant bitcoin block yesterday, which only includes KYC-verified transactions and does not include transactions from the addresses of sanctioned targets. The block was discovered five days after the Marathon completed the transition from other mining pools to fully compliant mining pools on May 1. From that day on, the entire 10.37 EH/S is only allocated to mine transactions that comply with KYC/OFAC.

Although still somewhat novel, OFAC began to include associated cryptocurrency addresses from “specially designated nationals” in 2018, which were blocked due to its relationship with criminal activities and money laundering. For example, 20 addresses related to the Lazarus group (a North Korean cybercrime group that was hacked last year) were added to the list only last year.

The company explained its intention to mine only clean blocks earlier this year. Its CEO announced that they are committed to meeting the demand for pollution-free Bitcoin in the US institutional market. Marathon Executive Chairman Merrick Okamoto said:

“Although institutional interest in Bitcoin is accelerating, many large funds and companies have expressed concerns about buying Bitcoin, which may be stigmatized by evil actors,”

Marathon uses specially designed software to filter non-compliant transactions called Blockseer designed by DMG Blockchain, which has been approved through a memorandum of understanding on March 31.

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The upcoming issue of substitutability

The marathon made the liberal community feel uneasy. The liberal community values ​​the principles of fungibility and censorship resistance, which are the basis of the Bitcoin network’s claims. For some, this may be the beginning of the distinction between “clean” bitcoins produced by regulated companies in the United States and contaminated coins from other non-compliant sources. This may affect the free trading of Bitcoin around the world, thereby effectively dividing the market.

On the other hand, this may be considered a problematic exaggeration at this stage. The marathon only controls 6% of the total hash rate in the Bitcoin network, which is unlikely to have any real impact on censored transactions, as there are currently a large number of miners who can receive them. However, the door is now open for regulations dealing with review systems at the mining level.

How do you think the marathon only mines blocks that comply with OFAC? Tell us in the comments section below.

Tags in this story

Bitcoin, cryptocurrency, fungibility, hash rate, marathon, mining, OFAC, pool, PoW, sanctions, sdn list

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