The 51% blockchain attack is a nefarious tactic whereby an entity gains majority control over a network’s hashrate utilizing the Proof-of-Work (PoW) consensus algorithm or assumes dominance over staking in blockchains employing the Proof-of-Stake (PoS) consensus mechanism. Prominent examples of such networks include Bitcoin and Ethereum. The ability to control the majority of a network’s resources presents attackers with the opportunity to manipulate the blockchain in their favor, such as executing double spends or halting the validation of new transactions, thereby compromising the integrity of the entire network.
According to the findings of Coin Metrics analysts, a 51% attack on the Bitcoin network would necessitate the purchase of approximately 7 million ASIC miners amounting to a staggering $20 billion investment. Given the limited availability of such miners, perpetrators would need to resort to innovative methods of manufacturing their own mining hardware, further escalating costs and presenting significant hurdles.
The cost of executing a similar attack on Ethereum’s staking mechanism would require a six-month investment of over $34 billion. Additionally, the operational expenses associated with managing more than 200 nodes and the substantial costs of utilizing cloud services such as AWS must be taken into account. These limitations and expenses paint a bleak picture for potential attackers.
Even in hypothetical scenarios where attackers might conduct double spend attacks with the hope of monetary gain, their efforts would yield minimal rewards. For instance, an attacker would have to spend a vast amount of $40 billion to potentially make a mere $1 billion. This meager yield of 2.5% falls far short of justifying the immense effort and risks involved, showcasing the resilience of both Bitcoin and Ethereum against such threats, as asserted by the Coin Metrics researchers.
Although a 51% attack was indeed carried out on the Ethereum network in 2021, unknown miners published their own chain consisting of 550 blocks, but their attempt proved unsuccessful. Ethereum co-founder Vitalik Buterin had previously stated that a 51% attack on Ethereum 2.0 would not be catastrophic when utilizing mass storage offered by DeFi protocols.