Step 1: Buy lots of Bitcoin miners
Currently, the Bitcoin network has a total hashing power of about 5.7 Exahash per second. That’s 5.7 x 1018 Hashes every second. The latest model of a modern Bitcoin miner, like the Antminer S9, produces about 14 Terrahash per second, or 14 x 1012.
That means that there is roughly the equivalent of 400,000 Antminer S9s currently in operation in the entire market, which at US$1099 each would cost about US$447 million.
To gain 50% of the total computing power, you would need to add the total of the world’s computing power to the network. As more miners join the network, it becomes more difficult for everyone to mine. If the price of Bitcoin does not rise, it will become unprofitable for others to mine, and you wouldn’t have to try as hard to take over 50% of the total network. You might also be able to build miners for cheaper than what they sell for online, but margins aren’t huge.
An organization should expect to invest around US$350-400 million to get the attack started.
Step 2: Run all the miners
An Antminer S9 consumes 1372 W, so 400,000 Antminers will consume 548,800 kW per hour (4,800 GWh per year). For perspective, the largest nuclear power station in the world, the Bruce Nuclear Power Station in Ontario, Canada, generates about 47,000 GWh in a single year.
Bitcoin’s power consumption of 550 MW is about 1/10th of that of a city like San Francisco, so Bitcoin is still small enough that a group could source electricity for the Bitcoin attack on the open market.
Assuming the attacker chose the cheapest power supply available, it would cost around US$0.04-0.06 per kWh, which means ~US$22,000-33,000 per hour for electricity, or roughly US$192 million per year—just to keep Bitcoin blocks empty.
- Interested in getting your own Bitcoin miner? Check out the best ASIC devices for mining Bitcoin
When will the ongoing power costs stop?
As the other miners slowly disappear, the daily electricity consumption can decrease bit by bit. It’s unclear how long others would be willing to hold out—maybe a month is enough, but it could take a year or longer. In a further increase to expenditures, the attacker might even have to buy more miners and spend more on electricity to keep an attack going.
An attacker would hope other miners would quickly slide into insolvency. It would be difficult to recoup money on the miners, though, as they can only mine Bitcoin (and Bitcoin is now dead), and will, therefore, have no resale value.
Who could finance a Bitcoin attack?
Bitcoin is a US$70 billion asset, with close to US$1 billion of trades worldwide in a single day. An organization could try to recoup some of the investments by shorting Bitcoin at the right moment, as it will inevitably lose much of its value in the first weeks of an attack.
Big banks have a market cap of around US$340 billion (JPMorgan Chase), US$95 billion (Mitsubishi UFJ) or US$145 billion (HSBC). Between them, they might be able to raise enough money to finance a Bitcoin attack, although half a billion would be hard for them to swallow (and justify to their shareholders).
However, if a government or party of governments wish to take down Bitcoin, it would likely be relatively easy for them to claim the funds from the taxpayer. And the total amount needed would probably be comparable to just a thousandth of the annual U.S. defense budget.
How could a Bitcoin attack be stopped?
There are a few things the Bitcoin community could do to stop an attack and rescue Bitcoin. At first, they could require miners to include transactions in every block, to which an attacker could respond by adding meaningless transactions between their Bitcoin.
Eventually, Bitcoin developers would change the proof-of-work algorithm of Bitcoin and make attackers’ (and everyone else’s) Bitcoin miners worthless. Other miners would quickly take their place, and more investment would be needed to keep the attack going.
Lexie M writes about information security, bitcoin, and privacy. She is excited about empowerment through technology, space travel, and pancakes with blueberries and blogs for ExpressVPN who is TechRadar’s number one VPN provider. This is an excerpt from Lexie’s eBook called “Bitcoin Security and Privacy : A Practical Guide” which is free to download on iOS, Android, Kindle Kobo and Nook.