Optimal Block Withholding Strategies for Blockchain Mining Pools

Abstract

In proof-of-work (PoW) consensus protocol-based blockchain mining, the pools can increase their rewards by utilizing block withholding attack. As such, how much computational power should be used to attack other pools becomes an important decision issue faced by the pools. This article mainly studies the block withholding attack issue faced by mining pools. Considering the case that there are two pools, where only one pool can attack the other pool, we propose an optimal block withholding strategies for pools. We also illustrate that attacking is not always the optimal strategies for the pools and present the conditions for attacking. With computational experiment approach, we designed several experiments to validate our proposed strategies, and our results can provide important managerial insights for pools in blockchain mining.