7 ms·

So, if I were a hedge fund, I can effectively short Bitcoins and spend a piddly amount to build a datacenter to carry a 51% attack. If the attack fails, I can r

So, if I were a hedge fund, I can effectively short Bitcoins and spend a piddly amount to build a datacenter to carry a 51% attack. If the attack fails, I can re-purpose my datacenter

servercobra 7y ago
Repurpose it how? You'd need ASICs to mount a 51% attack. Using a few quickly googled numbers, you'd need ~56EH/s to double the network and mount a 51% attack. An S9 does 14TH/s, so you'd need ~4 million, at $3k each. So around $12 billion (plus the datacenter, operations, etc). You'd pretty much send BTC to being worth $0...and then you're stuck with $12 billion in useless hardware.
- lmpostor 7y ago
  94EH and close to 50TH for top of the line equipment. Even if we were extremely generous would be a billion in hardware at the very least (I am assuming $500 manufacturing cost)
  - qroshan 7y ago
    The Market Cap of Bitcoin is $184,000,000,000 Theoretically, I can spend that much to make it's value go to $0. (yes, there are liquidity and other concerns, but you get the point)
    - arthurcolle 7y ago
      No, you couldn't because you'd need to borrow the entire float, which is impossible, practically and theoretically.
- qroshan 7y ago
  If my goal is to re-purpose, I would use a General Purpose Computer The Market Cap of Bitcoin is $184,000,000,000 I have plenty of money to play with.
  - nybble41 7y ago
    If your plan is to use general-purpose computers for mining then Bitcoin has nothing to worry about. You'll never manage a 51% attack that way, no when all your competition is using ASICs. Moreover, to gain $184B by shorting Bitcoin you'd need to find someone willing to loan you $184B worth of Bitcoin, and then somehow sell all of it without crashing the price or drawing unwanted attention to your activities. Of course if the price doesn't react the way you expect you could end up paying a lot more than $184B to buy it all back to repay the loan. You shouldn't assume that even a successful (but expensive, and obviously temporary) 51% attack will drive the price down to zero.
    - qroshan 7y ago
      It all depends on who is doing the attacking. If the attacker is a state government or someone with billions of dollars and compute to spare, ASICs aren't going to fight this losing battle. Heck, you can buy off the ASIC miners for a few million dollars (all we have to cover is their net profit, which is pretty low)
      - kragen 7y ago
        The cost of mounting the attack with general-purpose computers would be orders of magnitude higher than the US$12B calculated above, just from the energy bill. Check out https://en.bitcoin.it/wiki/Mining_hardware_comparison; https://en.bitcoin.it/wiki/Mining_hardware_comparison; the ASIC AntMiner S9 gets 10 billion hashes per joule, while on https://en.bitcoin.it/wiki/Non-specialized_hardware_comparison https://en.bitcoin.it/wiki/Non-specialized_hardware_comparis... you can see that the most efficient GPUs get 2–3 million hashes per joule, 3000 to 5000 times less. So instead of spending US$12 billion on hardware and US$4 billion per year on power, you'd be spending US$12 trillion per year on power. No state has such a large budget; that's more than half of the US GDP, and about 15% of world GDP. That's more than the amount of marketed energy produced in the world. That is, the attack you're proposing would require commandeering 15% of the world economy and more than doubling world electrical generation capacity. Bribing or backdooring ASIC miners is a far more likely vulnerability.
- aiCeivi9 7y ago
  Can anybody explain to me why would anybody try to make their alt-coin ASIC-resistant? They claim it is do decrease centralization but like parent says it just makes 51% attack possible with cloud computing and 0 investment in hardware or logistics.
  - tempay 7y ago
    The issue with ASIC mining is the the barrier to entry is extremely high so only a small number of people have the means to produce the chips. Economically it might not make sense to sell them and, to make the situation even worse, patents can prevent competitors being able to use the same innovations.
  - imtringued 7y ago
    The first ASIC company can just keep the ASICs for themselves.
- qaq 7y ago
  Well aren't there BTC futures on CME?
henrikschroder 7y ago
https://www.crypto51.app/ https://www.crypto51.app/ Bitcoin has long since passed the stage where you could 51%-attack it for piddly amounts of money. Most other altcoins, though...
- hn_throwaway_99 7y ago
  Those numbers are pretty inaccurate, though, for cases where the NiceHash capacity is well below what is needed to mount an attack. I.e. the $768k for an hour of bitcoin attack actually vastly under estimates the cost, because to mount that attack you would need to purchase the hashing power large enough to mount that attack.
  - solveit 7y ago
    Yes. Also, an attack would be fairly obvious and miners invested in the future of the blockchain (i.e. everyone using ASICS, which is everyone that matters) would increase their hashrate to mount a defense, increasing the cost by some hard-to-predict but significant amount.
    - lonelappde 7y ago
      How can anyone increase their hash rate? They're dependent on getting supply from ASIC manufacturers. That takes time. Or are ASICs capital expense cheap and available and already over provisioned compared to operational costs, like dark fiber optics?
      - solveit 7y ago
        Kind of. ASICs aren't exactly super available, but the manufacturers are also players, so if the attack is severe enough to be an existential threat to Bitcoin, I expect Bitmain (largest ASIC manufacturer) will fire up their unsold inventory which amounted to more than a billion dollars worth as of last year. Separate from the manufacturers, relatively easy courses of action I can see are buying hashing power from marketplaces like nicehash, and temporarily concentrating their machines on BTC and not mining BCH. This can only get you so much though since BTC hashrate dwarfs BCH hashrate.
lmpostor 7y ago
Hash rate is 90+m terahash and increasing, good luck R&Ding the chips and obtaining enough to achieve. Retail pricing is around 3k per 50 TH/s, and that is just for hardware.
- qroshan 7y ago
  There is a reason you are lurking in HN instead of working in a hedge fund. The theoretical maximum value one can gain from Bitcoin going to $0 is it's market cap ($184,000,000,000). If you take out the liquidity and risk, I can spend upto $184B to make the Bitcoin go to 0. If you are state actor, you can direct all the energy and all the computers to attack Bitcoin
  - jkhdigital 7y ago
    Ever heard of derivatives?
  - kristjansson 7y ago
    Sure, naked shorts are bounded, but a naked short is not the only way to profit from the decline of an asset. And really, if you’re talking about limiting cases, you’re bounded by what your counterparties are good for, and by what your relevant regulators will let you get away with (or, depending on who your counterparties are, how far you can go before you end up in a ditch somewhere)
  - kragen 7y ago
    This level of civility falls short of the standards we attempt to maintain on this website.
  - james_s_tayler 7y ago
    There is a reason you're lurking on HN instead of working in a hedge fund. You assume you can take the liquidity and risk factors out of a 51% attack. You also assume you can procure that amount of hardware. You also you can procure it instantly. Bitcoin is at least immune to imaginary 51% attacks, so I don't think anyone has anything to be worried about from your fake imaginary hedge fund.

So, if I were a hedge fund, I can effectively short Bitcoins and spend a piddly amount to build a datacenter to carry a 51% attack. If the attack fails, I can re-purpose my datacenter

servercobra 7y ago

Repurpose it how? You'd need ASICs to mount a 51% attack. Using a few quickly googled numbers, you'd need ~56EH/s to double the network and mount a 51% attack. An S9 does 14TH/s, so you'd need ~4 million, at $3k each. So around $12 billion (plus the datacenter, operations, etc). You'd pretty much send BTC to being worth $0...and then you're stuck with $12 billion in useless hardware.

lmpostor 7y ago
94EH and close to 50TH for top of the line equipment. Even if we were extremely generous would be a billion in hardware at the very least (I am assuming $500 manufacturing cost)
- qroshan 7y ago
  The Market Cap of Bitcoin is $184,000,000,000 Theoretically, I can spend that much to make it's value go to $0. (yes, there are liquidity and other concerns, but you get the point)
  - arthurcolle 7y ago
    No, you couldn't because you'd need to borrow the entire float, which is impossible, practically and theoretically.
qroshan 7y ago
If my goal is to re-purpose, I would use a General Purpose Computer The Market Cap of Bitcoin is $184,000,000,000 I have plenty of money to play with.
- nybble41 7y ago
  If your plan is to use general-purpose computers for mining then Bitcoin has nothing to worry about. You'll never manage a 51% attack that way, no when all your competition is using ASICs. Moreover, to gain $184B by shorting Bitcoin you'd need to find someone willing to loan you $184B worth of Bitcoin, and then somehow sell all of it without crashing the price or drawing unwanted attention to your activities. Of course if the price doesn't react the way you expect you could end up paying a lot more than $184B to buy it all back to repay the loan. You shouldn't assume that even a successful (but expensive, and obviously temporary) 51% attack will drive the price down to zero.
  - qroshan 7y ago
    It all depends on who is doing the attacking. If the attacker is a state government or someone with billions of dollars and compute to spare, ASICs aren't going to fight this losing battle. Heck, you can buy off the ASIC miners for a few million dollars (all we have to cover is their net profit, which is pretty low)
    - kragen 7y ago
      The cost of mounting the attack with general-purpose computers would be orders of magnitude higher than the US$12B calculated above, just from the energy bill. Check out https://en.bitcoin.it/wiki/Mining_hardware_comparison; https://en.bitcoin.it/wiki/Mining_hardware_comparison; the ASIC AntMiner S9 gets 10 billion hashes per joule, while on https://en.bitcoin.it/wiki/Non-specialized_hardware_comparison https://en.bitcoin.it/wiki/Non-specialized_hardware_comparis... you can see that the most efficient GPUs get 2–3 million hashes per joule, 3000 to 5000 times less. So instead of spending US$12 billion on hardware and US$4 billion per year on power, you'd be spending US$12 trillion per year on power. No state has such a large budget; that's more than half of the US GDP, and about 15% of world GDP. That's more than the amount of marketed energy produced in the world. That is, the attack you're proposing would require commandeering 15% of the world economy and more than doubling world electrical generation capacity. Bribing or backdooring ASIC miners is a far more likely vulnerability.
aiCeivi9 7y ago
Can anybody explain to me why would anybody try to make their alt-coin ASIC-resistant? They claim it is do decrease centralization but like parent says it just makes 51% attack possible with cloud computing and 0 investment in hardware or logistics.
- tempay 7y ago
  The issue with ASIC mining is the the barrier to entry is extremely high so only a small number of people have the means to produce the chips. Economically it might not make sense to sell them and, to make the situation even worse, patents can prevent competitors being able to use the same innovations.
- imtringued 7y ago
  The first ASIC company can just keep the ASICs for themselves.
qaq 7y ago
Well aren't there BTC futures on CME?

henrikschroder 7y ago

https://www.crypto51.app/ https://www.crypto51.app/ Bitcoin has long since passed the stage where you could 51%-attack it for piddly amounts of money. Most other altcoins, though...

hn_throwaway_99 7y ago
Those numbers are pretty inaccurate, though, for cases where the NiceHash capacity is well below what is needed to mount an attack. I.e. the $768k for an hour of bitcoin attack actually vastly under estimates the cost, because to mount that attack you would need to purchase the hashing power large enough to mount that attack.
- solveit 7y ago
  Yes. Also, an attack would be fairly obvious and miners invested in the future of the blockchain (i.e. everyone using ASICS, which is everyone that matters) would increase their hashrate to mount a defense, increasing the cost by some hard-to-predict but significant amount.
  - lonelappde 7y ago
    How can anyone increase their hash rate? They're dependent on getting supply from ASIC manufacturers. That takes time. Or are ASICs capital expense cheap and available and already over provisioned compared to operational costs, like dark fiber optics?
    - solveit 7y ago
      Kind of. ASICs aren't exactly super available, but the manufacturers are also players, so if the attack is severe enough to be an existential threat to Bitcoin, I expect Bitmain (largest ASIC manufacturer) will fire up their unsold inventory which amounted to more than a billion dollars worth as of last year. Separate from the manufacturers, relatively easy courses of action I can see are buying hashing power from marketplaces like nicehash, and temporarily concentrating their machines on BTC and not mining BCH. This can only get you so much though since BTC hashrate dwarfs BCH hashrate.

lmpostor 7y ago

Hash rate is 90+m terahash and increasing, good luck R&Ding the chips and obtaining enough to achieve. Retail pricing is around 3k per 50 TH/s, and that is just for hardware.

qroshan 7y ago
There is a reason you are lurking in HN instead of working in a hedge fund. The theoretical maximum value one can gain from Bitcoin going to $0 is it's market cap ($184,000,000,000). If you take out the liquidity and risk, I can spend upto $184B to make the Bitcoin go to 0. If you are state actor, you can direct all the energy and all the computers to attack Bitcoin
- jkhdigital 7y ago
  Ever heard of derivatives?
- kristjansson 7y ago
  Sure, naked shorts are bounded, but a naked short is not the only way to profit from the decline of an asset. And really, if you’re talking about limiting cases, you’re bounded by what your counterparties are good for, and by what your relevant regulators will let you get away with (or, depending on who your counterparties are, how far you can go before you end up in a ditch somewhere)
- kragen 7y ago
  This level of civility falls short of the standards we attempt to maintain on this website.
- james_s_tayler 7y ago
  There is a reason you're lurking on HN instead of working in a hedge fund. You assume you can take the liquidity and risk factors out of a 51% attack. You also assume you can procure that amount of hardware. You also you can procure it instantly. Bitcoin is at least immune to imaginary 51% attacks, so I don't think anyone has anything to be worried about from your fake imaginary hedge fund.