New research from crypto intelligence firm Coin Metrics suggests that it is no longer economically viable for nation-states to execute 51% attacks on the Bitcoin and Ethereum networks due to the exorbitant costs involved. A 51% attack occurs when a malicious entity controls over 51% of the mining power in a proof-of-work system like Bitcoin or over 51% of the staked cryptocurrency in a proof-of-stake network like Ethereum. This control theoretically allows the attacker to manipulate the blockchain, disrupting its functionality and eroding trust.
The research report, authored by Lucas Nuzzi, Kyle Waters, and Matias Andrade and published on February 15, introduces the concept of Total Cost of Attack (TCA) to accurately gauge the expense required to execute an attack on a blockchain network. By applying TCA, the report concludes that attacking the Bitcoin or Ethereum networks is not financially viable for malicious actors, removing the incentive for such attacks.
According to the report's findings, even in the most profitable scenario of a double-spend attack, the potential earnings for the attacker would only amount to $1 billion after spending approximately $40 billion. This equates to a mere 2.5% return, making it an unattractive proposition for attackers.
In the case of a 51% attack on Bitcoin, the report estimates that the attacker would need to acquire a staggering 7 million ASIC mining machines, costing around $20 billion. However, the market does not have enough ASIC devices to facilitate such an attack, forcing the report to explore alternative attack vectors, albeit with similarly prohibitive costs.
The report also addresses concerns about potential 34% staking attacks on the Ethereum network by Lido validators. However, it concludes that executing such an attack would be both time-consuming and costly, estimating a required investment of over $34 billion and the management of over 200 nodes, further dissuading potential attackers.
Nic Carter, partner at Castle Island Ventures, lauded Coin Metric's research as a significant contribution to the field, emphasizing its empirical approach in contrast to previous theory-driven analyses. Carter hailed it as a groundbreaking analysis that fills a notable gap in existing literature on blockchain security.
