Bitcoin & Ethereum Immune to Nation-State 51% Attacks, Coin Metrics Reveals
Summary:
A recent study by cryptocurrency intelligence firm, Coin Metrics, has found that due to the exorbitantly high-cost attacks, destroying Bitcoin and Ethereum network via 51% attacks is no longer feasible for nation-states. The research also debunked the fears of a 34% staking attack from Lido validators on Ethereum. Considering the current capital and operational costs, it is impractical for an attacker to maintain control of 51% hash rate. The report also ruled out the profitability of such an attack, with a meager return of 2.5% even in the most lucrative double-spend scenario.
Cryptocurrency intelligence firm Coin Metrics has released research suggesting that the Bitcoin and Ethereum network cannot be taken down via 51% attacks by nation-states owing to the exorbitant costs associated. A 51% attack emerges when a malevolent party controls more than half the mining hash rate in a proof-of-work system, like Bitcoin, or has a majority of staked crypto in a proof-of-stake network, such as Ethereum. Attackers, hypothetically, can modify the blockchain, obstructing transactions from getting approval or duplicating tokens, completely dismantling the network by undermining trust. In their study, published on February 15, Coin Metrics researchers Lucas Nuzzi, Kyle Water, and Matias Andrade contended that no practical methods exist for a nation-State attacker to run continuous attacks due to the huge capital and operational expenditures needed to achieve and maintain 51% control.
The team utilized a measure called the "Total Cost to Attack" (TCA), to exactly compute the cost involved in assaulting a blockchain network. With the help of TCA, they concluded that there are no profitable means to attack either Bitcoin or Ethereum networks, negating any financial incentive for a potential malevolent actor. They noted that even in the most lucrative double-spend scenario, the attacker's potential earnings of $1 billion after an investment of $40 billion would amount to a paltry return of 2.5%.
Analysing real-time hash rate output and secondary market data, the study estimated that a 51% attack on Bitcoin would necessitate an entity to acquire an astounding 7 million ASIC mining rigs, costing roughly around $20 billion. The report also suggested the unfeasibility of this attack as there are not enough ASIC rigs available in the market.
The possibility of a nation-state attacker manufacturing their own mining rigs was considered. Nonetheless, even with the reverse-engineering of the Bitmain AntMiner S9, the only feasible device for mass production, the cost would still exceed $20 billion.
Further, the report debunked the fears of a potential 34% staking attack on Ethereum from Lido validators. Despite the expansion of Liquid Staking Derivative (LSD) providers, predominantly LidoDAO, being perceived as a grave risk to the Ethereum network, the study found this threat to be overstated. It concluded that an attack on Ethereum, leveraging LSDs, would not only be exceptionally time-consuming, but also staggeringly high-priced. An assault on Ethereum via LSDs would cost a minimum of $34 billion, stated the researchers.
Nic Carter, partner at Castle Island Ventures, commended the research carried out by Coin Metric as "extremely significant." He opined that this study marked the first instance of a comprehensive and empirical analysis being carried out, as prior assessments were mostly hypothetical or vague in nature.
Published At
2/16/2024 5:25:05 AM
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