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Mind the gap in the mining game

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  • Kyoung-Kuk Kim
  • Donghwa Seo

Abstract

We analyze intentional block delays (mining gaps) in Proof-of-Work blockchain systems, where miners strategically balance mining rewards against operational costs. Using a game-theoretic model, we derive a Nash equilibrium with optimal mining strategies and show that miners may delay block creation for better cumulative rewards rather than immediate competition. Furthermore, mining gaps coupled with a difficulty adjustment algorithm, which is designed to stabilize a blockchain system, may actually increase the instability of the block creation process. We propose conditions to address sustainability concerns as block rewards decrease and reliance on transaction fees increases. Our findings are illustrated through a two-player game simulation and an analysis of the Bitcoin network, providing insights for blockchain design and policy. This work contributes to understanding strategic mining behavior and its impact on blockchain stability and efficiency.

Suggested Citation

  • Kyoung-Kuk Kim & Donghwa Seo, 2026. "Mind the gap in the mining game," Quantitative Finance, Taylor & Francis Journals, vol. 26(2), pages 213-233, February.
    • Handle: RePEc:taf:quantf:v:26:y:2026:i:2:p:213-233
    DOI: 10.1080/14697688.2025.2583378
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