According to recent research from Coin Metrics, it is no longer feasible for nation-states to destroy the Bitcoin and Ethereum networks through 51% attacks. These attacks involve a malicious actor having control over the majority of the mining hash rate or staked crypto in a proof-of-work or proof-of-stake system, respectively. The attackers could then manipulate the blockchain and undermine trust by preventing new transactions or reversing transactions to double spend tokens. However, Coin Metrics researchers Lucas Nuzzi, Kyle Waters, and Matias Andrade argue in their report that the astronomical costs involved in executing a 51% attack make it impractical for nation-states to do so.
To quantify the cost of a 51% attack, the researchers introduced a metric called “Total Cost to Attack” (TCA). Using this metric, the study concluded that attacking the Bitcoin or Ethereum networks is not financially viable. The report states, “In none of the hypothesized attacks presented here [would the attacker] be able to profit by attacking Bitcoin or Ethereum.”
Analyzing secondary market data and real-time hash rate output, the report found that a 51% attack on Bitcoin would require an attacker to purchase around 7 million ASIC mining rigs, costing approximately $20 billion. However, given the limited availability of ASIC rigs, the report explores an alternative attack vector where a nation-state attacker manufactures their own mining rigs. Even in this scenario, the cost would still exceed $20 billion.
The study also addresses concerns about a potential 34% staking attack on the Ethereum network by Lido validators. It concludes that leveraging liquid staking derivative (LSD) providers, such as LidoDAO, to attack Ethereum would not only be time-consuming but also prohibitively expensive. The report estimates that such an attack would take 6 months and cost at least $34 billion.
Castle Island Ventures partner Nic Carter praised Coin Metric’s research as groundbreaking, noting that previous analyses were largely speculative. He commended the rigorous and empirical nature of this report, stating that it provides a significant contribution to the literature on the subject.
Overall, the research from Coin Metrics highlights the significant costs involved in executing 51% attacks on Bitcoin and Ethereum, making them unfeasible for nation-states.