It is no longer viable for nation-states to destroy the Bitcoin and Ethereum networks via 51% attacks due to the astronomical costs required to do so, according to the latest research from crypto intelligence firm Coin Metrics.
A 51% attack refers to a malicious actor owning more than 51% of the mining hash rate in a proof-of-work system (such as Bitcoin) or 51% of staked crypto in a proof-of-stake network (like Ethereum). Attackers could theoretically use this power to alter the blockchain, like prevent new transactions from gaining confirmations or reverse transactions to double spend tokens, for example, which would destroy the network by eroding trust.
In a Feb. 15 report, Coin Metrics researchers Lucas Nuzzi, Kyle Waters and Matias Andrade argued that there are no longer viable ways for a nation-state attacker to continuously run an attack given the current cost of capital and operational expenses to achieve 51% control.
9 We also find no ways for a nation-state attacker to continuously run a 51% / 34% attack if the goal is to destroy these networks.
The possibility of retaliation techniques makes ideologically driven attacks costly at each retaliation round.
In the end, the network survives.
— Lucas Nuzzi (@LucasNuzzi) February 15, 2024
The authors used a metric called “Total Cost to Attack” (TCA) to quantify exactly how much it would cost to attack a blockchain network.
Using TCA, the report concluded that there are no profitable avenues by which to attack either the Bitcoin or Ethereum networks, nullifying the financial incentive for a nefarious attacker to do so.
“In none of the hypothesized attacks presented here [would the attacker] be able to profit by attacking Bitcoin or Ethereum,” read the report.
“Consider that even in the most profitable double spend scenario presented, where the attacker could potentially make $1B after spending $40B, that would account for a 2.5% rate of return.”
By analyzing secondary market data and real-time hash rate output, the report found a 51% attack on Bitcoin would require an actor to purchase a staggering 7 million ASIC mining rigs, which would cost somewhere around the $20billion mark.
Noting that there simply aren’t enough ASIC rigs available on the market, the report moved to the next potential attack vector, which could be leveraged by a particularly “relentless” actor.
Assuming that a nation-state attacker was “resourceful enough” to manufacture their own mining rigs — with the Bitmain AntMiner S9 being the only “plausible” device that could be reverse-engineered for production — it would still cost north of $20 billion.
Ethereum 34% attacks also overblown
The report also found that concerns over a potential 34% staking attack from Lido validators on Ethereum may also be misplaced.
The continued growth of liquid staking derivative (LSD) providers — namely LidoDAO — has been viewed by many as a severe threat to the Ethereum network.
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However, the report concluded that it would not only be extremely time-consuming but also incredibly expensive for someone to leverage LSDs to attack the Ethereum blockchain.
“We estimate an attack on Ethereum would take 6 months due to the churn limit preventing stake from being deployed all at once,” said Nuzzi.
“That would cost over 34B USD. The attacker would have to manage over 200 nodes and spend 1M USD on AWS alone.”
Castle Island Ventures partner Nic Carter praised Coin Metric’s research as being “enormously important.” Carter noted that previous analyses had been largely vague or theory-driven and that this report marked the first time a rigorous and empirical analysis had been conducted.
“This is analysis that has never been possible before. This is a very significant contribution to the literature, and one that I personally have been waiting for for a long time,” wrote Carter.
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