Ethermine The Largest Ethereum Miner, Stops Processing Transactions

Ethermine, the largest Ethereum miner, stops processing sanctioned transactions i.e. will no longer generate block that contains Tornado Cash transactions. This is a result of OFAC penalties and is a classic example of protocol-level filtering.

Ethermine, Largest Ethereum Miner, Stops Processing Sanctioned Transactions

And so, with a single push of a button, the possibility of a decentralized, open, and free internet is jeopardized. This is not an exaggeration, fear-mongering, or clickbait. What Ethermine has done jeopardizes us all.

Takens Theorem, a cryptocurrency specialist, noticed that Ethermine has stopped processing Tornado Cash transactions and shared the graph below. According to sources who checked on-chain data, Ethermine did not create a block containing a Tornado Cash transaction inside the time shown below.

If censorship resistance isn’t a goal, these networks can be a *whole lot* simpler and more efficient. https://t.co/PbhFKl4Z74

— Matthew Green (@matthew_d_green) August 19, 2022

We have to travel back around 10 days to discover an Ethermine-generated block with a Tornado Cash transaction. Block 15306892 was mined by Ethermine and was created on August 9th. In the block, the Tornado Cash router completed a 10 ETH transaction.

A review of the most recent Tornado Cash Router transactions indicated that Hiveon, P2Pool, 2Miners, and others were victorious.

Why Does It Matter?

The United States recently sanctioned the use of Tornado Cash through OFAC, making it unlawful for any U.S. company to connect with the protocol.

Following this penalty, Circle “blacklisted” USDC on the Ethereum network, preventing any holder who had previously engaged with Tornado Cash from interacting with the smart contract. This action effectively halted all $USDC transactions through Tornado Cash.

Following that, DeFi protocols such as Aave, Uniswap, Balancer, and others added an API from TRM Labs that disabled the front end of their dApps, thereby prohibiting OFAC-approved addresses.

According to reports, Aave restored access to addresses that had been “dusted” with 0.1 ETH by a hacktivist in an attempt to highlight one of the main concerns with complying with the penalties. According to OFAC, every address that communicated with Tornado Cash was now sanctioned by the United States. As a result, when the hacktivist transferred 0.1 ETH to various key persons in the crypto industry, it demonstrated how easy the penalties could be circumvented.

While it is understandable that Aave has restored access to the high-profile individuals who were targeted, the question remains, what will happen to users who are targeted by such an assault in the future?

It is a question worth meditating on. In any case, we expect the industry to rise up and find solutions to such problems in the future.

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