Profit lag and alternate network mining

TL;DR

This paper introduces the concept of profit lag in mining strategies, providing closed-form formulas for various strategies, and proposes a more profitable attack method called alternate network mining, which is harder to defend against.

Contribution

It defines profit lag, derives closed-form formulas for multiple mining strategies, and introduces a new, more profitable attack strategy called alternate network mining.

Findings

Closed-form formulas for profit lag and revenue ratio in selfish mining.

Confirmation of earlier numerical results and clarification of profitability misunderstandings.

Introduction of a more profitable attack strategy that is harder to counter.

Abstract

For a mining strategy we define the notion of "profit lag" as the minimum time it takes to be profitable after that moment. We compute closed forms for the profit lag and the revenue ratio for the strategies "selfish mining" and "intermittent selfish mining". This confirms some earlier numerical simulations and clarifies misunderstandings on profitability in the literature. We also study mining pairs of PoW cryptocurrencies, often coming from a fork, with the same mining algorithm. This represents a vector of attack that can be exploited using the "alternate network mining" strategy that we define. We compute closed forms for the profit lag and the revenue ratiofor this strategy that is more profitable than selfish mining and intermittent selfish mining. It is also harder to counter since it does not rely on a flaw in the difficulty adjustment formula that is the reason for profitability of the other strategies.