On the Profitability of Selfish Blockchain Mining Under Consideration of Ruin
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Publication:5031007
DOI10.1287/OPRE.2021.2169zbMATH Open1484.91526arXiv2010.12577OpenAlexW3215247136MaRDI QIDQ5031007FDOQ5031007
Hansjörg Albrecher, Pierre-Olivier Goffard
Publication date: 18 February 2022
Published in: Operations Research (Search for Journal in Brave)
Abstract: Mining blocks on a blockchain equipped with a proof of work consensus protocol is well-known to be resource-consuming. A miner bears the operational cost, mainly electricity consumption and IT gear, of mining, and is compensated by a capital gain when a block is discovered. This paper aims at quantifying the profitability of mining when the possible event of ruin is also considered. This is done by formulating a tractable stochastic model and using tools from applied probability and analysis, including the explicit solution of a certain type of advanced functional differential equation. The expected profit at a future time point is determined for the situation when the miner follows the protocol as well as when he/she withholds blocks. The obtained explicit expressions allow to analyze the sensitivity with respect to the different model ingredients and to identify conditions under which selfish mining is a strategic advantage.
Full work available at URL: https://arxiv.org/abs/2010.12577
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Cited In (5)
- Publish or Perish: A Backward-Compatible Defense Against Selfish Mining in Bitcoin
- Uncle-block attack: blockchain mining threat beyond block withholding for rational and uncooperative miners
- On the randomized Schmitter problem
- Blockchain mining in pools: analyzing the trade-off between profitability and ruin
- Oceanic Games: Centralization Risks and Incentives in Blockchain Mining
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