Analysis, Bitcoin, Mining

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

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

Burj Khalifa Costs $1.5 to Build
The Burj Khalifa, the tallest building in the world, cost $1.5 billion to build / Photo by Zoltan Tasi on Unsplash

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.

Calculations and Math

Fixed Costs:
The 7 day average of the Bitcoin network hash rate, as of November 23rd 16:00 UTC, is 41,483,931 terahashes.
https://www.blockchain.com/en/charts/hash-rate

S9i ASIC specifications: 14 terahashes; consumes 1320 Watts; costs $307 per unit
T15 ASIC specifications: 23 terahashes; consumes 1541 Watts; $913 per unit
https://shop.bitmain.com

To acquire more than 50 percent of the Bitcoin network, an attacker would need at minimum the same number of ASICs that are already in circulation.

Network hash rate / terahashes per ASIC = number of ASICs necessary to acquire 50 percent
41,483,931 network terahashes / 14 terahashes = 2,963,138 S9is
41,483,931 network terahashes / 23 terahashes = 1,803,649 T15s

Calculations for total current ASIC usage: 2,963,138 * 1.75 (crude estimate accounting for older models) = 5,185,492

2,963,138 S9is * $307 per S9i = $909,683,366
1,803,649 T15s * $913 per T15 = $1,646,731,537

Including bulk discount of 10 percent for the size of the purchase and economies of scale.

Total for S9is after discount = $818,715,029
Total for T15s after discount = $1,482,058,383

Infrastructure costs such as housing are a multiple of hardware costs from anywhere between an additional 22 percent to 40 percent, according to the CEO of a large-scale mining operation based in Canada. We will use the low figure to again account for economies of scale.

S9i infrastructure costs: $818,715,029 * 22% = $180,117,307
T15 infrastructure costs: $1,482,058,383 * 22% = $326,052,844

Variable Costs:
Costs of daily electricity consumption for S9i:
2,963,138 ASICs * 1320W = 3,911,342,160 Watts
3,911,342,160 Watts / 1000 = 3,911,342 kWh
3,911,342 kWh * 24 hours = 93,872,212 kWh per day
93,872,212 * $0.03 per kWh = $2,816,166 per day in electricity
Electricity costs based the low-end of the electricity rates in Washington State, the state with the average lowest electricity costs in the United States: https://www.electricitylocal.com/states/washington/

Costs of daily electricity consumption for T15:
1,803,649 T15s * 1541 Watts = 2,779,423,109 Watts
2,779,423,109 Watts / 1000 = 2,779,423 kW
2,779,424 kW * 24 hours = 66,706,155 kWh
66,706,155 kWh * $0.03 per kWh = $2,001,185 per day in electricity

Cost of labor and maintenance above electric costs: 10%. This is an estimate based on an interview with two different large-scale miners in Canada and Georgia who chose to remain anonymous.

Average kWh: ((((3,911,342,160 Watts + 2,779,423,109 Watts) / 2) * 24 hours) * 365 days) / 1E12 watt hrs per terawatt hrs = 29.3 TWh

This estimate is short of Denmark’s oft-cited annual energy consumption of 32 TWh, closer to Morocco's consumption of 29 TWh.

S9i: ($2,816,166) * 10% = $281,616
T15: ($2,001,185) * 10% = $200,189

Total Costs:
S9i fixed costs: $818,715,029 ASICs + $153,099,711 other infrastructure = $971,814,740

T15 fixed costs: $1,482,058,383 ASICs + $326,052,844 other infrastructure = $1,808,111,227

S9i daily variable costs: $2,816,166 electricity + $281,616 misc. = $3,097,782
T15 daily variable costs: $2,001,185 electricity + $200,189 misc. = $2,201,374

51% attack may require at least 10 days of sustained mining, at a minimum, based on the recent Bitcoin Cash hash wars:

S9i 10 days of mining: $3,097,782 * 10 days = $30,977,820
T15 10 days of mining: $2,201,374 * 10 days = $22,013,740

Total cost of S9i attack: $971,814,740 + $30,977,820 = $1,002,792,560
Total cost of T15 attack: $1,808,111,227 + $22,013,740 = $1,830,124,967

Average cost of an attack: ($1,002,792,560 + $1,830,124,967) / 2 = $1,416,458,764
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Mitchell Moos

Mitchell is a software enthusiast and entrepreneur. In addition to writing, he runs a non-profit that teaches people about the blockchain. In his spare time he loves playing chess or hiking.

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