Destroying the Bitcoin and Ethereum network through 51% attacks has become financially unfeasible for nation-states due to the exorbitant costs involved. This is according to research from crypto intelligence firm Coin Metrics.
A 51% attack occurs when a malicious entity possesses over 51% of the mining hash rate in a proof-of-work network like Bitcoin or 51% of staked crypto in a proof-of-stake network like Ethereum. This capability theoretically empowers attackers to manipulate the blockchain, potentially halting confirmation of new transactions or reversing transactions to execute double spending of tokens, among other actions.
In theory, malicious actors could utilize this authority to manipulate the blockchain, for instance, by obstructing the confirmation of new transactions or executing token double-spending. The consensus suggests that such actions would undermine trust and potentially lead to the network’s collapse.
According to a report released on Thursday by Coin Metrics researchers Lucas Nuzzi, Kyle Water, and Matias Andrade, nation-state attackers no longer have feasible methods to sustain a continuous attack with 51% control considering the current cost of capital and operational expenses.
The authors employed a metric known as “Total Cost to Attack” (TCA) to precisely measure the expenses associated with attacking a blockchain network. By using TCA, the report determined that there are no financially advantageous paths to attack either the Bitcoin or Ethereum networks, eliminating the economic motivation for a malicious attacker to engage in such actions. The report read:
“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.”
After examining the secondary market data and current hash rate outputs, the report discovered that executing a 51% attack on Bitcoin would necessitate an entity to acquire an astounding 7 million ASIC mining rigs, amounting to approximately $20 billion in expenses.
Given the scarcity of available ASIC rigs in the market, the report then shifted focus to explore the next potential avenue for attack, one that could be exploited by a particularly determined actor.
If a nation-state attacker were deemed “resourceful enough” to fabricate their own mining rigs, considering the Bitmain AntMiner S9 as the sole “plausible” device for reverse-engineering and production, the estimated cost would still exceed $20 billion.
Additionally, the report discovered that worries regarding a potential 34% staking attack from Lido validators on Ethereum might not be warranted.
While the expansion of Liquid Staking Derivative (LSD) providers, particularly LidoDAO, has been perceived as a significant menace to the Ethereum network by some, the report concluded that exploiting LSDs to attack the Ethereum blockchain would not only be highly laborious but also exceedingly costly.
“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.” said Nuzzi.
Nic Carter, a partner at Castle Island Ventures, lauded Coin Metric’s research as incredibly significant. Carter opined that previous assessments had mostly been ambiguous or theoretical, emphasizing that this report represented the inaugural instance of a thorough and empirical analysis being undertaken. “This is an 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 a long time,” he said.
