Selfish Mining

November 21, 2023 - Around 2 mins mins to read

Understanding Selfish Mining

Selfish mining is a strategy used by miners to maximize their profits by creating separate forks and withholding information about mined blocks from the rest of the network. This practice poses a threat to the protocol’s overall health as it promotes collusion and increases the risk of centralization.

Bitcoin mining relies on factors such as mining machine efficiency, electricity costs, and hash power contributed to the network. It is designed to maintain decentralization by rewarding individual miners on the blockchain. This approach has led to the popularity of mining pools, which allow miners to receive consistent rewards.

However, miners can optimize their mining efforts and increase their returns by engaging in selfish mining. By not announcing new blocks to the public network, miners can expedite the mining process and reduce resource wastage.

The resulting forked blockchains will be smaller than the public blockchain. However, miners can attract miners from the public blockchain to join the forked chain by strategically timing the revelation of new blocks.

This process continues until the forked chain surpasses the original chain in size and becomes more profitable to mine. This dominance of the forked chain compromises the network’s decentralization.

Despite its potential benefits, selfish mining is not a sustainable long-term strategy. Successful implementation of selfish mining would erode public trust in the cryptocurrency and undermine the value of miners’ tokens. Additionally, if all miners adopt this strategy, the overall benefits are likely to be minimal.