n per year—just to keep Bitcoin blocks empty.
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 (JP Morgan 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 Bitcoins.
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.
The best way to make Bitcoin useless is to mine empty blocks and make it impossible for anybody to make transfers, which would make Bitcoins worthless.
It would cost about US$350-400 million upfront to produce enough Bitcoin miners, and about 16 million per month to make Bitcoin useless. An attacker might be able to make some of that back by shorting the market, but even for a large bank, this will be difficult to raise.
The community would have a few tricks up their sleeves to render an attack useless, which would require further investment to keep it going.