Go Yamamoto

Yoko Shibuya, Go Yamamoto, Fuhito Kojima et al.

Several attacks have been proposed against Proof-of-Work blockchains, which may increase the attacker's share of mining rewards (e.g., selfish mining, block withholding). A further impact of such attacks, which has not been considered in prior work, is that decreasing the profitability of mining for honest nodes incentivizes them to stop mining or to leave the attacked chain for a more profitable one. The departure of honest nodes exacerbates the attack and may further decrease profitability and incentivize more honest nodes to leave. In this paper, we first present an empirical analysis showing that there is a statistically significant correlation between the profitability of mining and the total hash rate, confirming that miners indeed respond to changing profitability. Second, we present a theoretical analysis showing that selfish mining under such elastic hash supply leads either to the collapse of a chain, i.e., all honest nodes leaving, or to a stable equilibrium depending on the attacker's initial share.

Go Yamamoto, Aron Laszka, Fuhito Kojima

We model and analyze blockchain miners who seek to maximize the compound return of their mining businesses. The analysis of the optimal strategies finds a new equilibrium point among the miners and the mining pools, which predicts the market share of each miner or mining pool. The cost of mining determines the share of each miner or mining pool at equilibrium. We conclude that neither miners nor mining pools who seek to maximize their compound return will have a financial incentive to occupy more than 50% of the hash rate if the cost of mining is at the same level for all. However, if there is an outstandingly cost-efficient miner, then the market share of this miner may exceed 50% in the equilibrium, which can threaten the viability of the entire ecosystem.