Mining blocks on a blockchain equipped with a proof of work consensus protocol
is well-known to be resource-consuming. A miner bears the operational cost, mainly
electricity consumption and IT gear, of mining, and is compensated by a capital gain
when a block is discovered. This paper aims at quantifying the profitability of mining
when the possible event of ruin is also considered. This is done by formulating
a tractable stochastic model and using tools from applied probability and analysis,
including the explicit solution of a certain type of advanced functional differential
equation. The expected profit at a future time point is determined for the situation
when the miner follows the protocol as well as when he/she withholds blocks. The
obtained explicit expressions allow us to analyze the sensitivity with respect to the
different model components and to identify conditions under which selfish mining
is a strategic advantage.