Mining Power Misestimation in PoW Blockchain
Sang‐Yoon Chang · 2020
In blockchain and cryptocurrency, a miner's estimation of its computational power capability (relative to the overall mining network's) is critical since it is used for profit estimation and mining control. We study the impact on the miner's power estimation in the presence of other rational miners, such as those launching selfish mining and block withholding. Such rational mining underestimates the total network proof-of-work rate and thus overestimates the miner's relative power. This paper introduces the novel mining power misestimation problem and analyzes its impact. Our analyses show that the incorrect estimation of the mining power yields the profit overestimation and drives the miner to actively mine when the actual expected profit is negative and that the problem/impact grows as there are greater rational miners withholding or delaying blocks. This paper informs the blockchain communities of the mining power misestimation and discusses the potential countermeasures for future work.