Coin Metrics cites cost barriers as protective measures against 51% attacks, ensuring BTC and ETH security.
Coin Metrics, a crypto intelligence firm, has released a new study revealing that it is no longer feasible for nation-states to dismantle the BTC and ETH networks through 51% attacks due to the high expenses involved.
A 51% attack involves gaining majority control over a network’s hash rate in proof-of-work systems like Bitcoin or staking in proof-of-stake networks such as Ethereum, allowing for potential manipulation of the blockchain.
The research, conducted by Lucas Nuzzi, Kyle Waters, and Matias Andrade of Coin Metrics, introduces the “Total Cost to Attack” (TCA) metric to estimate the expenses associated with such malicious activities. Their findings indicate that attacking Bitcoin (BTC) or Ethereum (ETH) would not be financially viable or profitable for attackers, thereby eliminating the incentive for such actions.
In the case of Bitcoin, attempting to gain control would require acquiring approximately 7 million ASIC mining rigs, which would cost around $20 billion. However, the market does not have a sufficient number of ASIC rigs available, and even if an attacker decided to manufacture them, the cost would still exceed $20 billion.
This scenario not only renders the attack impractical but also economically inefficient, as the most profitable double-spend attack would only result in a 2.5% return on a hypothetical $40 billion investment to gain $1 billion.
Ethereum faces a similar situation with its transition to a proof-of-stake model. The report evaluates the feasibility of a 34% attack by Lido validators and concludes that attempting to compromise the Ethereum network using Liquid Staking Derivatives (LSDs) would be costly, exceeding $34 billion, and time-consuming, taking up to six months due to the churn limit.
Furthermore, the logistical challenge of managing over 200 nodes and incurring significant expenses, such as $1 million on Amazon Web Services, further diminishes the plausibility of such an attack.
Nic Carter, a partner at Castle Island Ventures, praised the report for providing a detailed and empirical examination of the impracticality of 51% attacks on these leading cryptocurrency networks. He noted that previous analyses lacked the concrete, data-driven approach seen in Coin Metrics’ research, making it a significant contribution to understanding the security and resilience of Bitcoin and Ethereum against potential nation-state-level threats.
