By
Temitope Olatunji
April 26th, 2024
As per Coin Metrics researchers, the 51% attacks on Bitcoin could cost anywhere $20 billion, and huge mining machinery, which makes it practically impossible.
Crypto analytics firm Coin Metrics recently published the results of its latest research stating that it won’t be viable for nation-states to conduct 51% attacks on the Bitcoin and the Ethereum blockchain any further. In the report, Coin Metrics mentions that the astronomical costs that would be incurred to conduct such attacks are absolutely unviable.
A 51% attack occurs when a malicious entity controls over 51% of the mining hash rate in a proof-of-work system (e.g., Bitcoin) or 51% of staked crypto in a proof-of-stake network (such as Ethereum). With this control, attackers could potentially manipulate the blockchain by preventing confirmation of new transactions or by reversing transactions to execute double-spending. This ability to disrupt the network undermines its trustworthiness, which can further lead to significant consequences.
In the report, Coin Metrics researchers Lucas Nuzzi, Kyle Water, and Matias Andrade used a metric dubbed “Total Cost to Attack” (TCA) to determine how much it would cost these two blockchains exactly. As per the TCA data, the researchers noted that there are no profitable avenues for attacking Bitcoin and Ethereum. The report notes:
“In none of the hypothesized attacks presented here [would the attacker] be able to profit by attacking Bitcoin or Ethereum. 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.”
Attacking the Bitcoin Network Can Cost Up to $20 Billion
After examining both secondary market data and real-time hash rate output, the report determined that orchestrating a 51% attack on Bitcoin would require a massive 7 million ASIC mining rigs, amounting to an estimated cost of around $20 billion.
Acknowledging the scarcity of available ASIC rigs in the market, the report shifted focus to another potential avenue for attack. The researchers also considered one of the cases where an exceptionally determined actor could exploit the network.
In the scenario where a nation-state adversary possesses the resources to fabricate their own mining rigs, specifically considering the Bitmain AntMiner S9 as the only viable device for reverse engineering and production, the projected cost would still exceed $20 billion.
34% Attack on Ethereum Practically Impossible
The report further indicated that worries regarding a possible 34% staking attack originating from Lido validators on the Ethereum network are overblown.
The expansion of Liquid Staking Derivative (LSD) providers, particularly LidoDAO, has raised concerns about potential risks to the Ethereum ecosystem. However, the report countered these apprehensions.
The researchers concluded that orchestrating an attack on the Ethereum blockchain using LSDs would not only entail significant time investment but also entail exorbitant costs, thereby diminishing the likelihood of such an occurrence.
“We estimate an attack on Ethereum would take 6 months due to the churn limit preventing stakes from being deployed all at once. That would cost over 34B USD. The attacker would have to manage over 200 nodes and spend 1M USD on AWS alone,” noted the researchers.