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Selfish Mining Attack: Explained

March 21, 2024

Quick Summary

Within the cryptocurrency community, there has been much discussion on the heated topic of selfish mining. Basically, selfish mining is a tactic used by a miner or group of miners to boost earnings by taking advantage of flaws in the mining procedure. Some believe it is used for the best interests of the miners; however, some claim that it is a destructive force that negatively affects the crypto-mining industry.

This blog aims to provide you with a detailed view of selfish mining, its working, potential threats against the blockchain and effects on the mining ecosystem.

Table of Contents

    What is Selfish Mining?

    What is Selfish Mining?

    Withholding or postponing the release of new blocks on purpose in order to obtain a competitive edge over other miners is known as selfish mining. The usual procedure for a miner to add a new block to their copy of the blockchain is to broadcast it to the network.

    It can be defined simply as the state in which a single miner or group of miners controls more than half of the overall hash rate, enabling them to influence the blockchain to their benefit. With selfish mining, the miner can decide to keep the block a secret and carry on mining on top of it to extend the chain. As a result, other miners’ work on shorter chains can be declared invalid, and this longer chain can be broadcast to the network.

    Miners execute selfish mining to maximize their income, which involves keeping newly found blocks hidden from the rest of the network and only revealing them once another miner has figured out the puzzle for the next block. It increases the selfish miners’ likelihood of mining the next block by giving them a head start on solving the next block.

    How does Selfish Mining work?

    How does Selfish Mining work?

    The freshly generated blocks are hidden by miners and made accessible on private chains or secret networks. This procedure reduces network latency problems, speeds up the process of finding a new block, and lowers overall operation costs. In the beginning, a branched blockchain is shorter than a public blockchain. The network’s nodes are organized into various blocks. As much as possible, two can be created simultaneously. The blockchain gets forked when two chains are published concurrently and linked by the final block.

    In this method, a private chain is formed that both creates and hides new blocks. Until the private blockchain’s block height crosses that of the public blockchain, the entire procedure is repeated. The freshly formed blocks are subsequently added to the public blockchain by the selfish miners. The “honest” public blockchain effectively merges with the forked chain. The newly adopted blocks and cryptocurrency are awarded to the miners who successfully mine the new blockchain on the public chain.

    Each miner begins in State 0, which is the initial state. In state 1, a selfish miner extracts one fresh block and conceals it. State 2 shows that while the selfish miner hides one block, the honest miner declares that it has mined one new block. The selfish miner then displays its concealed block right away. The state would merge into State 3 in the meantime. In this scenario, some miners would obtain blocks from selfish miners and use those blocks as the foundation for mining the subsequent block. As long as it mines successfully on the blocks found by selfish miners, it may ensure a profit regardless of whether it is an honest or selfish mining block.

    How is Selfish Mining a threat to crypto miners?

    The security, dependability, and integrity of the blockchain networks are all impacted by the large and severe impacts of selfish mining on cryptocurrency miners and the mining sector.

    A few dangers to the industry are listed below:

    • Security Risk

    The network’s security is the main thing that selfish mining affects. The blockchain’s consensus mechanism can be manipulated by a miner or group of miners that possess more than 50% of the network’s processing power. It can result in the issuance of erroneous blocks that impair the network’s operation. Double-spending attacks, in which a user spends the same bitcoin twice, may result from this manipulation. Users may suffer large financial losses as a result, and the blockchain’s reputation may be destroyed. In addition, the network’s security has been weakened, leaving it open to malicious activity and hacker assaults.

    • Decentralization

    The blockchain network’s decentralization is impacted by selfish mining as well. A single entity can influence a network’s decision-making process if it possesses more than 50% of its processing power. The philosophy of blockchain technology, which is predicated on decentralization and transparency, stands in opposition to this concentration of power. Furthermore, selfish mining hinders small miners’ ability to engage with the network, which increases power centralization.

    • Network Congestion

    An excessive number of transactions on the network might cause congestion, which is another issue that selfish mining can cause. A poor user experience may result from this congestion, which can cause delays in transaction processing and higher transaction fees.

    • Reputational Damage

    The blockchain’s reputation may be harmed as a result of the selfish mining industry’s effects. Users may decide to move to other options if they lose faith in the security and dependability of the network, which could result in a loss of market share and a drop in the network’s value.

    • Loss of Transaction Fees

    In the blockchain network, selfish mining may result in a loss of transaction fees. It is due to the possibility that selfish miners will obstruct the finding of fresh blocks, which could create a delay in transaction confirmation. It can result in a backlog of pending transactions, which would lower the transaction fees that miners get paid.

    • Extended Confirmation Times

    Transactions in the blockchain network may take longer to confirm as a result of selfish mining. It is due to the possibility that selfish miners will obstruct the finding of fresh blocks, which could create a delay in transaction confirmation. Users of the network may become irritated if this causes a delay in transaction confirmation

    How does the Selfish Mining attack affect Bitcoin’s security?

    • The network’s overall hash power will become increasingly concentrated in the hands of a small number of dominant individuals as avaricious miners hoard freshly produced blocks. The Bitcoin network may become more centralized as a result of this hash power concentration, weakening its decentralization and freedom from controlling authorities.
    • A 51% attack might be launched by a single miner or group of miners who own more than 50% of the network’s hash power. It would enable them to double-spend bitcoins and risk the security of the entire network. Selfish miners can potentially obtain control over the network and raise their relative hash power by withholding newly generated blocks, threatening the security of the whole network.
    • Selfish miners may raise transaction costs for the rest of the network by withholding freshly mined blocks, which could result in a drop in the uptake and use of Bitcoin. The network’s worth and finances may be impacted as a result of this drop in adoption.
    • When a miner engages in selfish mining, they fail to notify the network of the blocks they have already mined, causing other miners to use computational resources trying to mine already-mined blocks. As a result, the selfish miner has an edge over other miners and may eventually collect a major portion of the mining rewards and, as a result, more control over the network.

    How do we prevent Selfish Mining attacks?

    Selfish mining withholds blocks from the blockchain, putting its integrity at risk and perhaps causing centralization. Several actions may be taken, and some of them have been taken to lessen the negative effects of selfish mining on the network. Let’s examine the improvements and cures that have been suggested to combat selfish mining.

    1. Network Upgrades

    Increasing the network’s resistance to selfish mining is one of the best strategies to combat it. It is best to change the blockchain protocol to combat selfish mining. For example, miners more commonly use the Ghost protocol for the Ethereum token. Selfish mining is strictly prohibited by the protocol, which pays miners who validate their blocks earlier with larger rewards.

    2. Restricting Selfish Miners

    Restricting selfish miners is an additional measure to combat the issue. Finding the selfish miners and adding them to a blocklist will help achieve this. Although this strategy has its uses, it is not infallible. To avoid being discovered, miners can switch up their identities or relocate to various pools.

    3. Encouraging Honest Mining

    Some suggestions advocate for rewarding honest mining as a means of combating selfish mining. One way to prevent selfish mining is to impose penalties on miners who engage in such behaviour.

    4. Cooperation among Miners

    Promoting collaboration among miners can help combat selfish mining. Before releasing their blocks to the network, miners can, for instance, decide to share them. It aids in guaranteeing that the longest chain is consistently selected.

    5. Reducing the Mining Reward

    Another useful strategy for combating selfish mining is to alter the mining reward. For instance, miners might be less inclined to participate in selfish mining if the reward for discovering a block is decreased. In the same way, increasing the reward for publishing a block first might discourage mining that is motivated by greed.

    6. Using a different consensus algorithm

    As an alternative consensus process, proof-of-stake (PoS) depends on validators rather than miners to produce new blocks. Validators have a lower incentive to participate in selfish mining since they are at risk of losing more because their decision is based on their stake in the network. PoS does, however, come with a unique set of difficulties, including the possibility of centralization and the initial token distribution.

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    Selfish mining is the greatest threat to the whole crypto-mining industry; however, with the right knowledge and information, it can be prevented. With proper regulations and solutions in place, the miners can combat selfish mining attacks.

    While it’s critical to take action to stop selfish mining, it’s also crucial to make sure that any solutions put in place do not compromise the network’s security and decentralization in any way.

    FAQs on Selfish Mining Attack

    • Is selfish mining dangerous?

      Yes, selfish mining is dangerous as it badly affects the network to gain rewards by dishonest means.


    • What would happen if the government imposed regulation?

      It would ensure the network’s security is maintained; however, the decentralization would end, too.

    • How do I avoid a selfish mining attack?

      Upgrading the network, educating people, and penalizing the attack can help you avoid selfish mining attacks.