Analysis of Selfish Mining Profitability via Monte Carlo Simulation.

Abstract

Abstract. The Bitcoin blockchain is a distributed ledger of transactions maintained by a network of nodes. The protocol assumes that honest nodes control a majority of the network's computing power. Conventional wisdom suggests that a minority group cannot earn revenue disproportionate to its hashing power, implying that the rational strategy is to remain honest. However, Eyal and Sirer (2013) challenged this view by introducing "Selfish Mining," a strategy that enables a minority pool to earn rewards exceeding its share of computing power. This paper replicates the original study using Monte Carlo simulations to verify the threshold at which this attack becomes profitable. The results confirm that a pool controlling more than 1/3 of the network hashrate can theoretically achieve higher returns than honest mining.