Why Bitcoin Remains Censorship Resistant: The Economics of Mining Incentives

Bitcoin’s most powerful feature isn’t the technology itself—it’s that the system becomes more resistant to censorship through economic incentives, not despite them. Here’s why: no matter how much pressure someone applies, if you’re willing to pay enough in fees, some miner somewhere will confirm your transaction. This is what “censorship resistant” really means.

The Difference Between Censorship Resistant and Censorship Proof

People often use the term “censorship proof” when talking about Bitcoin, but that’s technically wrong. Bitcoin is censorship resistant, not censorship proof. This distinction matters because it explains how the whole system actually works.

Any individual miner can refuse to include whatever they want in their blocks. That part is trivially easy. They can’t, however, prevent other miners from including that transaction in their blocks. A single miner’s refusal to process a transaction simply doesn’t matter when the global network can route around it. Censorship resistance means the system keeps working despite attempts at control; censorship proof would mean censorship is literally impossible. Bitcoin achieves the first one, not the second.

How Individual Miners Can Censor (But Can’t Stop the Network)

Let’s say a miner decides they won’t include certain transactions. That decision is free—at least in terms of direct cost. The only real cost is opportunity: they might earn less in fees if they turn away high-paying transactions. That’s their choice to make.

But here’s where it gets interesting: if these censoring miners actually comprised a majority of the network’s computing power, they could theoretically launch what’s called an orphaning attack. They’d reject any block mined by other miners that contained the transactions they wanted to censor, essentially trying to fork them off the chain. The problem? This would cost them money. Every time a minority miner found a block containing the censored transaction, it would delay the next block reaching the main chain, reducing the total income for the censoring majority. They’d be losing revenue on every censored block they orphaned. Unless the censoring miners were completely irrational—which would break Bitcoin’s security model entirely—they’d eventually give up or get outcompeted. The minority miners including those transactions would keep earning, keep investing their profits into more computing power, and eventually flip the majority.

For now, assume this doomsday scenario doesn’t happen. The more relevant case is when a minority of miners voluntarily choose to censor certain transactions.

The Fee Market Forces That Reward Non-Censoring Miners

This is where economics does the real work. When some miners refuse to process certain transactions, less blockspace becomes available for them. Fewer blocks, same transaction volume = higher fees.

Here’s the simplified math: imagine each block can hold 10 transactions. On average, 5 blocks are found per day. Imagine 5 miners—some red (refusing to mine targeted transactions) and some green (willing to mine them).

For regular transactions: You need 50+ pending transactions before fees start climbing and the bidding war begins. That’s when all miners benefit equally from rising transaction costs.

For the censored transactions: Only 20+ pending transactions are needed to saturate the smaller available blockspace and trigger fee competition. But here’s the critical difference—only the green miners get those higher fees. The red miners deliberately excluded themselves from this revenue stream.

When censored transactions aren’t saturating the network, the fee income is evenly distributed—everyone’s making roughly the same per block. But the moment demand for censored transactions exceeds the available blockspace, green miners start earning noticeably more revenue per unit of computing power than red miners.

This income gap is unsustainable. Economics kicks in.

Why This Creates a Self-Correcting System

When green miners are earning more per hash than red miners, one of two things happens:

Option 1: Green miners reinvest their extra profits and expand their share of network computing power.

Option 2: Red miners get tired of earning less and defect to the green side, growing the non-censoring coalition.

Either way, the percentage of hashpower willing to mine censored transactions grows. This process repeats every time demand for censored transactions increases. The fee pressure keeps rising, pulling more computing power into the green camp, until the system reaches a new equilibrium. At that point, both red and green miners are earning similar revenue again, because the blockspace for censored transactions is no longer scarce.

Then, if demand for censored transactions increases further, the whole cycle repeats. The censored transactions’ blockspace becomes scarce again, green miners earn more, and network hashpower naturally flows toward them once more.

This is the mechanism. It’s not that miners are altruistic or that censorship is impossible. It’s that Bitcoin’s fee market creates a self-correcting system where attempting to censor a class of transactions automatically makes it more profitable not to censor them. Unless miners are willing to lose money indefinitely, censorship resistance emerges from pure economic incentive. This dynamic is precisely why Bitcoin remains censorship resistant—because the market punishes censors and rewards those who serve all transactions fairly.