What is Selfish Mining?
Let's find out Selfish Mining meaning, definition in crypto, what is Selfish Mining, and all other detailed facts.
Selfish mining is a blockchain mechanism that allows block miners to increase their profits. This mechanism utilizes blockchain forks by allowing miners to create new ones and keep their mined blocks to themselves rather than share them with the network.
Mining cryptocurrency such as Bitcoin (BTC) is a resource-intensive process. It can incur high electricity costs and heat emissions due to the energy consumption of the mining rigs and the hash power required.
Blockchains are based on principles of decentralization. The miners that create a new valid block receive rewards in cryptocurrency for their work. Many miners have found that forming mining pools acts as a better incentive to mine and receive rewards.
The issues of resource consumption have led to miners looking for solutions that could optimize the mining process. One of such solutions proposed in 2013 is selfish mining.
Based on the selfish mining mechanism, the miners aren’t required to broadcast their new blocks to the entire blockchain network. Instead, they can create a new fork to improve the processing speed and mitigate the waste of resources.
While each miner can create a newly forked blockchain of their own, they can also join a pre-existing fork. In some cases, a specific fork may grow bigger than the original blockchain. This can impact the decentralization of the entire system as one fork holds more centralized power to mine blocks that are not widely distributed for validation.
The process of selfish mining has significant consequences on the health of the blockchain and its decentralization. It cannot be utilized as a long-term mining strategy because it can severely devalue the tokens.
Selfish mining can also damage the reputation of the cryptocurrency in question as it is no longer verified by the decentralized network. After a while, the miners can see the financial benefits of selfish mining dwindle and it becomes increasingly less sustainable.