A situation in which a miner mines a new block but does not broadcast this new block to the other miners.
First proposed by Cornell researchers in 2013, “selfish mining” defines a mechanism for
miners to work together and increase their profits by creating separate
forks and not revealing the mined
blocks to the rest of the network. This impacts the overall health of the
protocol, since collusion increases the risk for
centralization.
Bitcoin mining is reliant on a number of factors, including, but not limited to mining machines efficiency, electricity cost and
hash power contributed to the
network. The design ensures
decentralization by granting rewards to individual miners on the blockchain, which is one of the reasons for the popularity of
mining pools as it allows miners to receive continuous and consistent rewards.
However, miners can greatly optimize mining and increase yield by engaging in selfish mining. If they stop declaring new blocks to the public network, it can make the process go faster and reduce resource waste.
The forked blockchains will be smaller than the public blockchain — but miners can ensure that miners from the
public blockchain leave their own chain and join the forked chain, by timing their revelation of new blocks.
This process is continued until the forked chain is greater than the original chain and is more lucrative to mine. It can cause the forked chain to become more dominant than the original one, which severely compromises decentralization.
However, selfish mining isn’t a viable long term strategy because, if successful, the miners would have reduced the value of their tokens by damaging the public’s trust in the
cryptocurrency. Furthermore, if all miners engage in the same activity, nobody is likely to benefit considerably.