Mind the Mining

Abstract

In this paper we revisit the mining strategies in Proof of Work based cryptocurrencies and propose two strategies, which we call smart and smarter mining, that in many cases strictly dominate honest mining. In contrast to other known attacks, such as selfish mining, which induce zero-sum games among the miners, the strategies proposed in this paper increase miners' profit by reducing their variable costs (i.e., electricity). Moreover, the proposed strategies are viable for much smaller miners than previously known attacks and, surprisingly, an attack launched by one miner can be profitable for all other miners as well. While saving electricity is very encouraging for the environment, it may affect the coin's security. The smart and smarter mining strategies expose the coin to under 50% attacks, and this vulnerability might only grow when new miners join the coin in response to the increased profit margins induced by these strategies.