Does anyone know of any papers / evidence of bitcoin mining pools communicating outside of the bitcoin network for financial gain? It seems plausible in practice, but I am not sure if that has occurred.

To be clear, I mean two mining pools sending blocks to each other outside of the network. This would give them a head start / be faster than using bitcoin's diffusion process.

  • What you've described is a block withholding attack ('selfish mining'). You could search that term to learn more. For an example of a parallel network designed to facilitate miner communication, see: bitcoinfibre.org
    – chytrik
    Jan 22 '20 at 23:36
  • Thanks for the comment. I was familiar with selfish mining, but I think your second statement about the parallel network is what I was looking for. I was reading some papers the assumption is that an adversary controls message propagation, and was wondering if smart agents could circumvent this by just spreading messages through various channels.
    – mdigi14
    Jan 23 '20 at 0:24
  • Having alternate forms of communication rather than the open internet is advantageous, rather than a "cheat" or malicious activity. It adds to the resiliency of the network and prevents incidental issues with internet routing ever being a consideration.
    – Claris
    Jan 23 '20 at 17:58
  • Yes I agree, some papers assume the adversary can control the message propagation of the network. In real life , where agents can use alternate forms of communication, this assumption means the adversary controls many different communication channels
    – mdigi14
    Jan 23 '20 at 21:10

This is definitely being done. One such network is FIBRE.

Obviously, miners want other miners to build on top of blocks they've mined as quickly as possible to increase the odds that their blocks will not be orphaned. And miners also want to get new blocks and start building on them as quickly as possible for the same reason.

So miners have every incentive to send and receive their blocks as quickly and as widely as possible. The bitcoin network is built to exchange blocks, but it's not its top design priority. So large scale miners use purpose built networks optimized for just that task.

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