A recent study by Coin Metrics, a crypto intelligence firm, suggests that it’s no longer feasible for nation-states to disrupt the Bitcoin (BTC) and Ethereum (ETH) networks through 51% attacks due to the exorbitant costs involved.
In a 51% attack, a malicious actor gains majority control of the mining hash rate in a proof-of-work system like Bitcoin or the staked crypto in a proof-of-stake network like Ethereum, potentially allowing them to manipulate the blockchain.
The study, authored by Coin Metrics researchers Lucas Nuzzi, Kyle Water, and Matias Andrade, introduces a new metric called “Total Cost to Attack” (TCA) to quantify the expenses associated with carrying out such attacks.
According to their findings, the current costs of capital and operational expenses make continuous attacks by nation-states economically unfeasible. Even in the most profitable double spend scenario considered, where an attacker could potentially make $1 billion after spending $40 billion, the rate of return would only be 2.5%.
To execute a 51% attack on Bitcoin, the researchers estimate that an attacker would need to purchase approximately 7 million ASIC mining rigs, costing around $20 billion. However, there simply aren’t enough ASIC rigs available on the market to carry out such an attack. Even if an attacker were to manufacture their own mining rigs, the estimated cost would still exceed $20 billion, making it financially unviable.
The study also addresses concerns about a potential 34% staking attack on the Ethereum network by Lido validators. Coin Metrics concludes that leveraging Liquid Staking Derivatives (LSDs) to attack Ethereum would be both time-consuming and extremely expensive, with an estimated cost exceeding $34 billion and requiring the management of over 200 nodes.
Experts, including Castle Island Ventures partner Nic Carter, praised Coin Metrics’ research as a significant contribution to the field, noting that previous analyses had been vague or theory-driven. This report, however, provides a rigorous and empirical analysis of the impracticality of 51% attacks on Bitcoin and Ethereum.
