Your comment really got me thinking and curious about the implications and impacts of that scenario, so out of curiosity I asked Claude about it and I found the output pretty interesting:

If all miners were coerced into only including KYC-verified transactions in Bitcoin blocks, there would be profound implications:

Short-term effects:

Immediate fragmentation of the Bitcoin network as some miners comply while others resist

Sharp decline in transaction processing capacity and significant backlogs

Price volatility as markets react to fundamental change in Bitcoin's properties

Potential hard fork creating two competing versions of Bitcoin (KYC-compliant and non-compliant)

Long-term societal and technical impacts:

Bitcoin's fundamental nature would change. The censorship-resistant, pseudonymous design would be undermined, transforming it from a permissionless to a permissioned system.

Black market for non-KYC transactions would emerge, with certain miners operating illegally in jurisdictions beyond regulatory reach.

New mining technologies would develop to circumvent restrictions, potentially using decentralized mining pools that make enforcement difficult.

Wealth redistribution as KYC requirements exclude billions without formal identification or banking relationships.

Privacy implications as Bitcoin transactions would become directly linked to real-world identities.

Alternative cryptocurrencies focused on privacy and censorship resistance would see massive adoption increases.

Geographic redistribution of mining operations to jurisdictions with fewer restrictions, potentially concentrating power in fewer countries.

This scenario highlights the tension between the original cypherpunk vision of Bitcoin and increasing government desires for financial surveillance and control.