Coin Metrics Reports That 51% Attacks on Bitcoin and Ethereum Networks Are Unfeasible Due to High Costs

It is no longer feasible for nation-states to dismantle the Bitcoin (BTC) and Ethereum (ETH) networks via 51% attacks.

As per the most recent findings from crypto intelligence company Coin Metrics, the exorbitant expenses associated with executing such attacks render them impractical and unprofitable.

A 51% attack involves a malicious entity controlling over 51% of the mining hash rate in a proof-of-work system like Bitcoin or over 51% of staked cryptocurrency in a proof-of-stake network like Ethereum.

This degree of dominance theoretically allows attackers to alter the blockchain and compromise its integrity.

51% Attacks on Bitcoin and Ethereum No Longer Feasible

In the report, Coin Metrics researchers Lucas Nuzzi, Kyle Water, and Matias Andrade contended that the current capital costs and operational expenditures related to obtaining 51% control make ongoing attacks by nation-state actors impractical.

The researchers introduced a metric termed “Total Cost to Attack” (TCA) to measure the expense of assaulting a blockchain network.

Utilizing this metric, the report determined that there are no lucrative options for attacking either the Bitcoin or Ethereum networks, thus eliminating the financial motivation for malicious attackers.

The report emphasized that even in the most lucrative double spend scenario examined, where an attacker could potentially gain $1 billion after investing $40 billion, the return on investment would merely be 2.5%.

By analyzing secondary market data and real-time hash rate output, the researchers discovered that a 51% attack on Bitcoin would necessitate the acquisition of roughly 7 million ASIC mining rigs, amounting to about $20 billion.

However, there are simply not enough ASIC rigs available on the market to carry out such an attack.

Even if a nation-state attacker were inventive enough to produce their own mining rigs, the report estimated the cost would exceed $20 billion, making it financially unfeasible.

Ethereum’s 34% Attack Overstated

The report also tackled worries regarding a potential 34% staking attack on the Ethereum network by Lido validators.

Coin Metrics concluded that utilizing Liquid Staking Derivatives (LSDs) to assault the Ethereum blockchain would not only be time-intensive but also exceedingly costly.

The researchers estimated that an attack on Ethereum would require six months due to the churn limit that prevents stake from being deployed all at once, with costs surpassing $34 billion.

The attacker would need to oversee more than 200 nodes and allocate $1 million solely for Amazon Web Services (AWS).

Experts, including Castle Island Ventures partner Nic Carter, commended Coin Metrics’ research as a notable advancement in the field.

Carter pointed out that earlier analyses had been ambiguous or theoretical, while this report offered a thorough and empirical examination of the impracticality of 51% attacks on Bitcoin and Ethereum.

“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.”

previous ‘cost to attack’ analyses of bitcoin have been vague or theory driven. no longer. the CM team developed mine-match, which meant they were able to identify virtually every ASIC mining on bitcoin (based on karim helmy’s research). this, combined with ASIC 2ndary…

— nic op_cat-er (@nic__carter) February 15, 2024

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