Analysis: Bitcoin Costs $1.4 Billion to 51% Attack, Consumes as Much Electricity as Morocco

To successfully conduct a 51 percent attack on the Bitcoin network would cost an incredible $1.4 billion. This massive network supports over 5 million specialized ASIC mining computers, consuming a total of 29 Terahashes of electricity—as much as the entire country of Morocco.

One of the underpinnings of the Bitcoin network is its security. The major selling points of BTC is its ability to survive censorship, repel malicious actors, and dodge regulatory scrutiny. To achieve this security, it is necessary that computers engage in an activity called ‘mining,’ the process of solving complex algorithms while adding transactions to the Bitcoin ledger.

In a clever combination of cryptography and behavioral economics, miners are rewarded for acting honestly and securing the network. These miners are selected randomly based on the percentage of the mining power they own and by extension the percentage of computer hardware that they own.

One of the key concepts in the Bitcoin blockchain is that the longest chain of blocks (equal to the longest string of selected miners) is considered the ‘real’ Bitcoin, or the real state of the ledger.

However, there is one vulnerability to this system. If an individual, or group of individuals, is able to secure more than fifty percent of the network, then they would be able to take control over it: a so-called fifty-one percent attack. Once taken over, this group could rewrite the supposedly immutable Bitcoin history, change the core software on the system, steal Bitcoin from users, and conduct a whole host of other nefarious acts.

Why Mining is Expensive

In order to secure the network against fifty-one percent attacks, it is crucial that inordinately expensive processes are required for any one group to gain control of more than half the network. As such, the process of mining is extremely electricity-intensive, and intentionally so. The purportedly ‘wasteful’ Bitcoin mining makes the cost of taking over the network impractical.

Analysts at CryptoSlate were able to compute the amount of money it would take to conduct such an attack. To gain a sustainable 50 percent or more of the network, it would require that an organization either build its own facilities or collude with existing Bitcoin miners.

For the full figures and calculations, scroll to the “Calculations and Math” section at the footer of the article.

By the Numbers

Based on the current number of computations produced by the computers solving the Bitcoin algorithm, a.k.a. the network hash rate, it would cost approximately $1.4 billion to conduct a fifty-one percent attack.

Such an attack would require 2.4 million of the most advanced ASIC computers currently available. To house these units it would require approximately $250 million in infrastructure, including buildings, ventilation, and other construction costs.

This many ASICs would consume roughly 29.3 Terrawatts of electricity annually, roughly the same amount of electricity that is consumed by the entire country of Morocco.

At a standard electricity rate of $0.12 per kWh, mining one Bitcoin costs $6100.

To run all of these ASICs would cost over $2 million per day in electricity alone. Labor and other miscellaneous costs would add another $240 thousand to this daily figure. Note, these figures do not include potential costs that could be recouped by selling Bitcoin back into the market during the chaos. It is possible that an attacker could recoup 20-100 percent of the costs depending on the health of the Bitcoin market at the time of the sale, potentially reducing the cost of attack.

Note, these metrics mirror what the total Bitcoin network currently consumes, not accounting for higher electricity costs and mining with inefficient hardware.

What this Means for Bitcoin

The astronomical costs to fifty-one percent attack Bitcoin make it fairly secure from a potential attack from an outsider. It is quite unlikely that any private entity would be able to amass the funds, or wherewithal, to attack the Bitcoin network. For a public network that facilitates over 250 thousand transactions per day, it is necessary for a network to be this secure.

Even if such an attack were possible, such an exercise would render any spoils near worthless as the confidence in the Bitcoin network would be destroyed.

That said, the network is still highly vulnerable to cartels. Some sources estimate that 70-80 percent of mining is conducted in China. Although these miners are competitors, many of them regularly meet with each other at conferences and other events. Since there are some lucrative incentives to collude, such as passing favorable updates to the Bitcoin software, it is possible that these miners are already impacting the direction of software updates to the underlying protocol.

Another such doomsday scenario is that a government, such as China’s, could gather the resources necessary to build this number of mining facilities, or even commandeer existing ones through nationalization.

Even considering all of these possibilities, the cost to totally undermine the Bitcoin network is astronomical. This clever combination of cryptography and financial incentives makes Bitcoin an incredibly secure public network, and, consequently, is one of the major reasons for Bitcoin’s underlying value and appeal as a store of value and a means of commerce.

However, how the technology will survive against more efficient security algorithms, such as proof-of-stake, is another matter entirely.