Many bitcoin miners in the West may acquiesce to the government's blacklisting of certain addresses if Russia tries to circumvent the sanctions.

Here's a direct excerpt from Marty's Bent Issue #1170: "This is what a real attack on Bitcoin would look like."

风险游戏板-比特币-地缘政治学.jpg.webp The risk game demonstrates major geopolitical potential. 迅捷的制裁和俄罗斯的比特币选择.png.webp (Resources)

As the Western world reacts to Russia's invasion of Ukraine, there are a number of things to watch out for in the coming days, weeks and months. Will the Western world cut off Russia's access to SWIFT, the international information network used by banks around the world to settle transactions between each other? If that happens, where will Russia turn? If they turn to Bitcoin, how will the Western world react from a regulatory standpoint?

To be honest, I don't actually think the likelihood of Russia being cut off by SWIFT is as high as many people think. I could be wrong, but I think the level of dependence of many European countries on gas and other commodities flowing out of Russia will prevent those aligned with Russia from actually cutting off SWIFT's influence on Putin and his staff.

Having said that, let's follow the path proposed by Eric Voskuil above. Let's assume that Russia is indeed excluded from the SWIFT network and forced to find an alternative. Aside from its relative liquidity, the emerging Bitcoin stack is a far superior currency and payment system. In this scenario, the likelihood of Russia turning to Bitcoin is greater than zero. If they adopt bitcoin as an alternative to the dollar system and SWIFT, the network will raise the ire of all governments that oppose Russia, and they may move to prevent bitcoin companies from interacting with Russia on the network. After all, the whole reason they were kicked out of SWIFT was to prevent them from being able to transact with other participants in the network.

If the Russians are able to access transactions contained in blocks with individuals in countries that are still connected to SWIFT, then this somehow mutes the cord-cutting. To prevent this from happening, it is entirely possible that the U.S. government and other NATO governments could try to impose regulations on mining to always keep a blacklist of Russian bitcoin addresses and never mine blocks with transactions sent from any of those addresses, lest they be severely punished for violating sanctions. Worse, they could even try to force whitelisting of approved addresses to be associated with personal identities and make it so that only mining pools are allowed to interact with those addresses.

In a world filled with profit-driven underdogs, it's not hard to imagine many corporate miners in the West bending over backwards to try to adapt to the situation so they can stay in business. As Eric points out, this could be Bitcoin's first real existential crisis. It would make the 2017 fork war look like a three-year-old soccer league. Getting nation states to put that kind of pressure on companies is a huge test.

Large-scale grid-connected operations would be the easiest goal. Off-grid miners will require much more effort. And at-home miners will be the most difficult to control. In this case, one would expect hash rates to be fully distributed globally, with a significant portion located in areas not intended to comply with these attempted regulations. Most importantly, one would hope that enough strong people would stand up for the network and what they know to be right and just. Bitcoin doesn't actually work if this type of censorship is allowed on the network. Bitcoin is essential in the digital age if we want to avoid the export of the nation's social credit system to the rest of the world. Make it a guarantee that needs to be protected at all costs. Even if that means actively defying a corrupt and incompetent federal government.

Let me be clear, this is in no way an endorsement of Putin and what he is doing right now. People recognize that Bitcoin is so valuable to the world that bending the knee is not an option. Even sending a message to Russia. Instead of rushing to react in the fog of war, the West should give peace a chance and adopt the Bitcoin standard, which will level the economic playing field globally and create the conditions for free trade like no human has ever experienced before. When free trade thrives, peace tends to thrive as well.

Hopefully, this is wishful thinking. If you're in the bitcoin mining business, then it's time to start taking this potential threat seriously. Start distributing your hashes as much as possible geographically. If you're a developer, make an effort to make it difficult to track transactions on the network, so this idea of regulation doesn't even make sense to begin with.

Hold on to your ass, freak.