They already know they can't prevent people from using bitcoin but they still want to surveil. The solution was to force centralized services to implement KYC and report back.
The solution is much more cunning than you think. It's to convince the overwhelming majority that being unable for the state to control the money supply is bad; that privacy is bad; that using energy is bad; that freedom of choice, speech, thought is bad. Over all, they argue that censorship and surveillance are necessary.