Undetectable Selfish Mining

TL;DR

This paper introduces a selfish mining strategy in Bitcoin that is statistically indistinguishable from honest mining, making detection difficult while remaining profitable for attackers with a significant portion of the network's hash power.

Contribution

The authors develop a new selfish mining variant that is provably statistically undetectable and profitable for miners with over 38.2% of total hash rate.

Findings

The strategy is undetectable under the stylized model with honest miners' orphan rate.

It remains profitable for attackers with more than 38.2% hash rate.

The orphaned block pattern matches that of a network with higher delay and honest miners.

Abstract

Seminal work of Eyal and Sirer (2014) establishes that a strategic Bitcoin miner may strictly profit by deviating from the intended Bitcoin protocol, using a strategy now termed *selfish mining*. More specifically, any miner with $>1/3$ of the total hashrate can earn bitcoin at a faster rate by selfish mining than by following the intended protocol (depending on network conditions, a lower fraction of hashrate may also suffice). One convincing critique of selfish mining in practice is that the presence of a selfish miner is *statistically detectable*: the pattern of orphaned blocks created by the presence of a selfish miner cannot be explained by natural network delays. Therefore, if an attacker chooses to selfish mine, users can detect this, and this may (significantly) negatively impact the value of BTC. So while the attacker may get slightly more bitcoin by selfish mining, these bitcoin may be worth significantly less USD. We develop a selfish mining variant that is provably *statistically undetectable*: the pattern of orphaned blocks is statistically identical to a world with only honest miners but higher network delay. Specifically, we consider a stylized model where honest miners with network delay produce orphaned blocks at each height independently with probability $\beta'$. We propose a selfish mining strategy that instead produces orphaned blocks at each height independently with probability $\beta > \beta'$. We further show that our strategy is strictly profitable for attackers with $38.2\% \ll 50\%$ of the total hashrate (and this holds for all natural orphan rates $\beta'$).