The Fallacy of the Selfish Miner in Bitcoin: An Economic Critique

Abstract

Contrary to Eyal and Sirer’s (2014) claim, the selfish-mine strategy poses no threat to the bitcoin protocol. In this paper, we demonstrate that the strategy leads to lower profits compared to profits attained with honest mining, and therefore, there is no incentive for rational miners to adopt it. We clarify a common misconception about the bitcoin mining protocol that misleads people into thinking that hiding and strategically revealing solved blocks can increase revenue. On the contrary, hiding solved blocks only puts them at risk for no gain: for any given difficulty setting, the selfish miner can never earn more blocks than what they would already be entitled to when using the honest strategy.