What is a 51% Attack?
51% attacks occur when a single entity or a group of colluding entities gain control of more than 50% of a blockchain network’s hashing power. Securing a majority position enables attackers to wield control over the network, allowing them to engage in activities such as double-spending, transaction censorship, and manipulation of the blockchain’s historical data. Such fraud undermines the trust and security of the affected cryptocurrency.
The role of mining energy
One key factor in the success of this fraud is the availability of computing energy. Occasionally, malevolent actors might endeavor to acquire or lease mining hardware as a means to accumulate the requisite computational power for perpetrating such fraudulent activities.
Understanding the role of mining energy in these scams can provide insights into how to prevent them, such as by implementing decentralized mining or adopting alternative consensus mechanisms.
Methods
Collecting over 50% of a blockchain’s hashing power is a challenging feat, but hackers can attempt to do this through several methods:
1. Accumulating hardware
A hacker can try to acquire a significant amount of mining hardware to achieve a majority of the network’s hashing energy. This method requires massive financial investment and access to vast amounts of electricity.
2. Colluding with other miners
Hackers could potentially form a coalition with other miners or mining pools, convincing them to combine their hashing energy to execute a 51% attack. This tactic relies on the assumption that the involved parties will act maliciously or be motivated by financial gain.
3. Renting hash power
Some platforms allow to rent of hashing energy for specific cryptocurrencies. A hacker might rent enough hash energy to temporarily gain control of over 50% of a network’s hash rate. However, this method is expensive and carries the risk of being detected by the platform or the targeted blockchain community.
4. Exploiting vulnerabilities
Should a hacker identify a vulnerability within a blockchain’s mining algorithm or consensus mechanism, they could potentially exploit it to commandeer a substantial portion of the network’s hash rate. This approach requires advanced technical knowledge and a deep understanding of the targeted blockchain’s inner workings.
Requirements for a Successful Attack
A successful 51% attack necessitates the following conditions:
- Influence over 50% of the network’s hashing energy.
- Sufficient resources and technical expertise to create, mine, and maintain a private fork.
- The ability to perform a duplicate transaction or other malicious actions without immediate detection.
- Successfully broadcasting the private fork to overtake the public blockchain.
Consequences of a Successful 51% Attack
A successful 51% hack can have severe implications for the targeted crypto:
- Loss of funds: Users and exchanges may suffer financial losses due to double-spending or fraudulent transactions.
- Less trust: In a structural compromise, the network’s security and reliability are jeopardized, culminating in diminished user confidence and the possible devaluation of the cryptocurrency.
- Damage to the ecosystem: A 51% attack can impact other projects and platforms built on or connected to the targeted blockchain.
Historical Examples of 51% Attacks
Several cryptocurrencies have fallen victim to 51% hacks, including:
- Ethereum Classic: In January 2019, Ethereum Classic experienced 51% fraud, leading to duplicate spendings transport of over $1 million.
- Bitcoin Gold: In May 2018, Bitcoin Gold suffered a 51% attack, with attackers managing to double-spend around $18 million worth of BTG.
- Verge: In April 2018, Verge experienced a 51% attack, resulting in the loss of approximately 3.5 million XVG, worth over $1 million at the time.
Can Bitcoin be hacked?
While theoretically possible, a 51% attack on Bitcoin is highly improbable due to its immense network size, decentralization, and hashing power.
For an attacker to gain control of over 50% of Bitcoin’s hashing energy they would need to invest in a massive amount of hardware, electricity, and infrastructure, which would be prohibitively expensive.
Additionally, the incentives for such an attack are diminished as the attacker risks devaluing the very asset they are trying to exploit.
Calculation
In this scenario, we will base our analysis on the following assumptions:
- Electricity cost: $0.05 per kWh
- Energy consumption of Antminer S19 Pro: 3250W
- Maintenance and cooling costs: 10% of energy costs
- Duration of the fraud: 1 week (7 days)
1. Required Hash Rate
Since you want to perform a 51% attack, you need to control more than 50% of the total network hash rate. The total Bitcoin network hash rate is 335.6339 EH/s (exahashes per second). To control 51%, you would need a hash rate of:
0.51 * 335.6339 EH/s ≈ 171.173 EH/s
2. Number of Antminers Needed
To calculate the number of Antminers needed, we need to know the hash rate of a single Antminer. Illustratively, let’s consider the Antminer S19 Pro as our case in point, boasting a hash rate of 110 TH/s (terahashes per second).
First, let’s convert the required hash rate from EH/s to TH/s:
171.173 EH/s = 171,173,000 TH/s
Now we can determine how many Antminers are required:
171,173,000 TH/s ÷ 110 TH/s ≈ 1,555,209 Antminers
3. Energy costs
First, we need to calculate the total energy consumption of all Antminers:
1,555,209 Antminers * 3250W ≈ 5,054,429,250W = 5,054.42925 MW
Now, let’s calculate the energy consumption per hour:
5,054.42925 MW * 1h = 5,054.42925 MWh
Next, we need to calculate the energy consumption for the entire week:
5,054.42925 MWh multiplied by 24 hours and then by 7 days yields an approximate total of 846,041.684 MWh.
Finally, let’s calculate the cost of energy for the entire week:
846,041.684 MWh * 1000 (to convert to kWh) * $0.05/kWh ≈ $42,302,084.20
4. Maintenance and cooling costs
We assume that maintenance and cooling costs are 10% of energy costs:
$42,302,084.20 * 0.10 ≈ $4,230,208.42
Overall Costs of the Attack
Now that we know how many Antminers are needed, we can calculate the total cost by multiplying the number of Antminers by the price of a single unit:
1,555,209 Antminers * $3,734 ≈ $5,807,150,406
Now we can calculate the total cost of the attack, including energy, maintenance, and cooling:
Cost of Antminers: $5,807,150,406
Energy costs: $42,302,084.20
Maintenance and cooling costs: $4,230,208.42
Total cost: $5,807,150,406 + $42,302,084.20 + $4,230,208.42 ≈ $5,891,754,574
So, the total cost of a successful 51% attack on Bitcoin, including the costs of energy, maintenance, and cooling, would be approximately $5.9 billion for a week-long attack.
How to Prevent it
There are several strategies to prevent or mitigate risks:
1. Increase network size and decentralization
A larger, more decentralized network is more resilient to attacks due to the higher hashing energy and distribution of control among miners.
2. Adopt a different consensus mechanism
Proof-of-Stake (PoS) and Delegated Proof-of-Stake (DPoS) present alternative consensus mechanisms that mitigate reliance on hashing power, rendering fraudulent attacks more challenging.
3. Implement checkpoints
Periodic checkpoints can be added to the blockchain, preventing attackers from altering the history beyond a certain point.
4. Use a hybrid consensus mechanism
Combining PoW with PoS or another consensus algorithm can make 51% of hacks more challenging and less economically viable for potential attackers.
The Advantage of PoS Over PoW
Proof-of-Stake (PoS) is a consensus mechanism that offers several advantages over Proof-of-Work (PoW) in terms of preventing 51% of hacks:
1. Reliance on tokens
Reduced reliance on hashing energy PoS relies on the number of tokens held by validators which makes it more difficult for an attacker to gain control of the network.
2. Economic disincentives
In PoS, an attacker would need to own a significant portion of the total token supply to launch an attack, making it more expensive and less attractive due to the risk of devaluing their holdings.
3. Energy efficiency
In contrast to PoW, PoS boasts greater energy efficiency, curbing the resources and expenses needed for network upkeep and enhancing resistance against centralization and potential attacks.
Future outlook
As the world of cryptocurrencies and blockchains continues to evolve, the threat of 51% attacks remains an ongoing concern for many digital assets. However, various solutions are being developed to mitigate the risk of such hacks and ensure the integrity of transactions on blockchain networks.
One possible solution is the implementation of alternative consensus algorithms, such as Proof of Stake (PoS). This reduces the likelihood of an attack by shifting the focus from computing power to the amount of cryptocurrency held by investors. The change makes it more challenging and less financially viable for an attacker to amass the necessary resources to launch a successful 51% attack.
Furthermore, the development of cross-chain interoperability solutions will enable blockchains to share security resources and validate transactions across multiple networks. This increased collaboration will help to distribute the risk of 51% attacks and provide an additional layer of protection for individual blockchains.