Coin Metrics Reports Bitcoin and Ethereum Networks Immune to 51% Attacks

The recent report by Coin Metrics shows that 51% and 34% of attacks targeting Ethereum and Bitcoin networks are unviable for nation-state attacks. The research indicates that nation-state attackers targeting to destroy the blockchains would incur astronomical costs to execute the 51% attacks. 

The recent research by the crypto intelligence firm illustrates that nation-state-sponsored criminal actors consider it nonviable to target Bitcoin and Ethereum networks. 

Bitcoin and Ethereum Networks Immune from 51% Attacks by Nation-State Actors 

Coin Metrics profiled 51% of attacks as occurring when the malicious actor owns over 51% of the mining hash rate within the proof-of-work system (POW) – Bitcoin network. 

A 51% attack is viable when the malicious actor accounts for over 51% of ownership in the proof-of-stake (POS) network like Ethereum. 

The malicious actors can theoretically leverage their power to alter the blockchain. Exercising such control allows the actors to hamper the confirmation of subsequent transactions. The malicious actors could reverse transactions to realize double spending of tokens to erode trust, thus destroying the network. 

The Thursday, February 15 report by Coin Metrics captured findings by Kyle Waters and Lucas Nuzzi, who argued that nation-state attackers no longer have a viable mechanism to run attacks continually targeting the Bitcoin and Ethereum networks. 

Matias Andrade echoed the argument that nation-state attackers are kept at bay by the astronomical cost and operational expenses to realize the 51% control. The authors deployed the Total Cost to Attack” (TCA) metric to quantify the cost the malicious actors would incur to execute a successful attack on the blockchain network. 

Nation-State Actors to Forego Incurring $40 Billion to Attack Bitcoin and Ethereum Networks

The researchers reflected on the TCA metric to conclude that nefarious attackers lack profitable avenues to attack the Ethereum and Bitcoin networks. The TCA allows the researchers to nullify the existence of financial incentives for a malicious attacker to target the two networks. 

The Thursday report illustrated that none of the hypothesized attacks would result in profit for the malicious attackers to target either Bitcoin or Ethereum. The report indicated that the actors could not afford to spend $40 billion even if they could earn $1 billion – a scenario yielding a 2.5% rate of return. 

The researchers analyzed the secondary market data alongside the real-time hash rate output to conclude that executing a 51% attack targeting Bitcoin would compel the actor to incur $20 billion in acquiring 7 million ASIC mining equipment. 

The report ruled out the existence of enough ASIC rigs on the market. The researchers hypothesized a scenario of alternative attack vectors that relentless actors could leverage.  

The researchers considered the possibility of the nation-state attacker backed by sufficient resources to manufacture mining rigs. 

The Coin Metrics researchers considered the Bitmain AntMiner S9 the only plausible device that relentless actors could reverse-engineer for its production. Nevertheless, the process would cost the actor above $20 billion. 

Coin Metrics Prove Ethereum 34% Attacks as Exaggerated

The Coin Metrics researchers examined the viability of a 34% staking attack arising from the Lido validators on the Ethereum network. The report considers such concerns as overblown and misplaced. 

The report indicated that the continued growth realized by the liquid staking derivative (LSD) providers, primarily LidoDAO, is perceived as imposing a severe threat to the Ethereum network. 

Coin Metrics report illustrates that leveraging the LSDs attack would involve an extremely time-consuming exercise and incredibly expensive to lodge attacks targeting the Ethereum blockchain. 

Nuzzi indicated that executing an attack on the Ethereum network would take the actor six months, given the existing churn limit, to avert a single deployment of stake. The actor would incur a $34 billion bill besides managing over 200 nodes and $1 million expense on AWS. 

Nic Carter from Castle Island Ventures hailed the Coin Metric’s research as enormously evidence-backed. The partner lashed out at the vague and theory-driven analyses conducted in the past. 

Carter indicated that the Coin Metrics report is a product of rigorous and empirical analysis not previously witnessed. It constitutes a critical contribution to the existing literature highly coveted by the community.