Mining Power Destruction Attacks in the Presence of Petty-Compliant Mining Pools

2025-02-11

AI Summary

This paper investigates three computational-power–disruption attacks—selfish mining, bribery attacks, and mining distraction attacks—that exploit Bitcoin’s difficulty adjustment mechanism in partially compliant mining pool environments. Using game-theoretic modeling, strategic simulation, and formal analysis of the difficulty adjustment algorithm, we formally define and analyze bribery and mining distraction attacks for the first time, while characterizing small-pool response behaviors. Our findings are: (1) Selfish mining becomes more damaging as non-adversarial hash power becomes more uniformly distributed; (2) Mining distraction attacks generate no orphan blocks and thus exhibit high stealth; (3) In small-pool settings, bribery attacks yield higher profitability than selfish mining or undercutting; (4) We quantify the threshold hash-rate reductions required to trigger downward difficulty adjustments and delineate the profitability boundaries of all three attacks, revealing that “wasteful” attacks can implicitly degrade network security by inflating effective hashrate volatility and undermining consensus stability.

Technology Category

• Game Theory and Economic Paradigms: Mechanism Design
• Multiagent Systems: Mechanism Design
• Data Mining & Knowledge Management: Representing, Reasoning, and Using Provenance, Trust

Application Category

• Economics, Online Markets and Human Computation: Economic aspects of blockchain and cryptocurrencies
• Web Mining and Content Analysis: Content-based information diffusion
• User Modeling, Personalization and Recommendation: Attacks and countermeasures in recommendation systems

Abstract

Bitcoin's security relies on its Proof-of-Work consensus, where miners solve puzzles to propose blocks. The puzzle's difficulty is set by the difficulty adjustment mechanism (DAM), based on the network's available mining power. Attacks that destroy some portion of mining power can exploit the DAM to lower difficulty, making such attacks profitable. In this paper, we analyze three types of mining power destruction attacks in the presence of petty-compliant mining pools: selfish mining, bribery, and mining power distraction attacks. We analyze selfish mining while accounting for the distribution of mining power among pools, a factor often overlooked in the literature. Our findings indicate that selfish mining can be more destructive when the non-adversarial mining share is well distributed among pools. We also introduce a novel bribery attack, where the adversarial pool bribes petty-compliant pools to orphan others' blocks. For small pools, we demonstrate that the bribery attack can dominate strategies like selfish mining or undercutting. Lastly, we present the mining distraction attack, where the adversarial pool incentivizes petty-compliant pools to abandon Bitcoin's puzzle and mine for a simpler puzzle, thus wasting some part of their mining power. Similar to the previous attacks, this attack can lower the mining difficulty, but with the difference that it does not generate any evidence of mining power destruction, such as orphan blocks.

Problem

• Exploit Bitcoin's difficulty adjustment mechanism
• Analyze selfish mining impacts on mining power distribution
• Introduce novel bribery and mining distraction attacks

Innovation

• Analyzes selfish mining impacts
• Introduces novel bribery attack
• Presents mining distraction attack