Wouldn't these actions trigger the creation of a shadow market for paid transactions?
Some pools will fight and block addresses, while other pools will add transactions from prohibited addresses to their blocks for money.
As long as mining is decentralized, small government mining pools will not be able to block transactions on the bitcoin network.
And how is the shadow market compared to the normal market? More expensive, and it gets targeted every day...
And unlike back market dealers that are mobile persons with distribution chains mining pools are sitting ducks, one letter and the datacenter cuts the pool's servers and that's all. Remember Mega?
Besides, people underestimate the power of a government that wants, and how much they want is the key in all this, to enforce something, what could the network do when a few pools even with 10-20% start this shit? Remember what happened when we went 30% down because of the hashrate drop, it will be the same as those blocks will probably been half-filled or even empty in some cases, as a government will want their pool to confirm only whitelabel addresses. This is one of the weaknesses of a decentralized system, you can't run from the people that play dirty and you have no one to turn to.
1. Decentralization (especially for Bitcoin) is myth. Because:
a) Since 2016-2017, when Antminer S9 was produced, Bitmain became the monopolist in mining chip development. Their chips were built on top of technology and were the most energy effective and as far as I know nothing changed today from point of view mining chip development. We have only one company that produces economic effective mining chips.
The M30S++ does 112 at 3470, the S19pro 110 at 3250, Bitmain is not that far ahead at the moment, right now if MicroBT would be able to produce 100k miners they would sell them in a matter of hours.
If you want to look at a monopoly there is TSMC.