New research from Coin Metrics, a leading crypto intelligence firm, has indicated that nation-states would find it financially unviable to execute 51% of attacks on Bitcoin and Ethereum networks.
These attacks, which involve controlling most of the network’s computing power or staked assets, have long been a concern in the crypto community due to their potential to undermine trust and disrupt transactions. However, according to the latest findings, the astronomical costs associated with such attacks render them impractical for malicious actors.
Cost analysis debunks feasibility of 51% attacks
The study, conducted by Coin Metrics researchers Lucas Nuzzi, Kyle Water, and Matias Andrade, introduced a metric called Total Cost to Attack (TCA) to assess the financial feasibility of executing 51% of attacks.
Through meticulous analysis, the researchers concluded that the sheer capital and operational expenses required to achieve 51% control over the Bitcoin or Ethereum networks would far exceed any potential gains for attackers. The report underscores that even in the most profitable scenarios, attackers would struggle to realize significant returns, with potential gains representing a mere fraction of the total investment.
Bitcoin and Ethereum Network resilience
The research revealed that executing a 51% attack on Bitcoin would necessitate the purchase of an estimated 7 million ASIC mining rigs, amounting to approximately $20 billion—a cost prohibitive for most entities.
Moreover, the lack of sufficient ASIC rigs on the market further complicates such an endeavor. Similarly, even if a nation-state were resourceful enough to manufacture its mining rigs, the expenses would still surpass the potential gains, making the attack financially untenable.
Addressing concerns surrounding potential 34% staking attacks on Ethereum, particularly from entities like Lido validators, the report provided reassurance. Despite fears of the growth of Liquid Staking Derivative (LSD) providers posing a threat to the Ethereum network, the study found such attacks to be time-consuming and exorbitantly costly.
The report estimated that executing an attack on Ethereum would require a significant investment exceeding $34 billion and involving complex logistical challenges, such as managing over 200 nodes and substantial expenditure on cloud computing services like AWS.
Industry response and implications
Commenting on the research, Castle Island Ventures partner Nic Carter lauded Coin Metric’s findings as a groundbreaking contribution to the crypto literature. Carter emphasized the empirical and rigorous nature of the analysis, noting that it provides valuable insights into the resilience of blockchain networks against potential attacks. The research underscores blockchain protocols’ increasing sophistication and resilience, mitigating concerns over the vulnerability of networks like Bitcoin and Ethereum to nation-state adversaries.
The latest research from Coin Metrics dispels fears surrounding the feasibility of 51% attacks on Bitcoin and Ethereum networks by nation-states. By analyzing the Total Cost to Attack (TCA), the study demonstrates that exorbitant financial expenses render such attacks economically unviable.
Moreover, concerns over potential staking attacks on Ethereum are mitigated by the impracticality and high costs associated with executing such maneuvers. This research highlights the robustness and resilience of blockchain networks against malicious actors, reaffirming confidence in the security of decentralized systems.
