Paper 2024/363

Time-Averaged Analysis of Selfish Mining in Bitcoin

Abstract

A Bitcoin miner who owns a sufficient amount of mining power can perform selfish mining to increase his relative revenue. Studies have demonstrated that the time-averaged profit of a selfish miner starts to rise once the mining difficulty level gets adjusted in favor of the attacker. Selfish mining profitability lies in the fact that orphan blocks are not incorporated into the current version of Bitcoin's difficulty adjustment mechanism (DAM). Therefore, it is believed that considering the count of orphan blocks in the DAM can result in selfish mining unprofitability. In this paper, we disprove this belief by providing a formal analysis of the selfish mining time-averaged profit. We present a precise definition of the orphan blocks that can be incorporated into calculating the next epoch's target and then introduce two modified versions of DAM in which both main-chain blocks and orphan blocks are incorporated. We propose two versions of smart intermittent selfish mining, where the first one dominates the normal intermittent selfish mining and the second one results in selfish mining profitability under the modified DAMs. Moreover, we present the orphan exclusion attack with the help of which the attacker can stop honest miners from reporting the orphan blocks. Using combinatorial tools, we analyze the profitability of selfish mining accompanied by the orphan exclusion attack under the modified DAMs. Our result shows that even when considering the orphan blocks in the DAM, normal selfish mining can still be profitable; however, the level of profitability under the modified DAMs is significantly lower than that observed under the current version of Bitcoin DAM.