Then Miley tweeted this, leading us to believe she was hacked and the Instagram does NOT belong to her. But notice she didn't deny that it was her, just merely stated that she doesn't have Instagram:
So maybe she posted it under a hidden Instagram account (that still says her name) or maybe she didn't and someone is just trying to expose Miley and all her pot-smoking ways. There is a 99.9% chance that even if she didn't post it herself, this is indeed Miley smoking a big fat blunt, because as you can see in this photo, the person pictured has the same tattoo that Miley has on the inside of her finger:
In other news, everyone smokes pot.