 only make mining more profitable for those who operate secretly.
As a response, Bitcoin mining will go underground, and nodes will hide behind VPNs and the Tor Network. As long as there is money to be made in Bitcoin mining, people will risk their freedom to take part. For example, Bitcoin mining remains attractive in Venezuela, where Bitcoin is illegal.
Make Bitcoin illegal
If a state were to make Bitcoin illegal, it would become much harder for people to buy Bitcoin miners, exchange Bitcoins into paper money, or accept it as payments in a store.
But as in the world of online drug markets (which are also, to some degree, driven by Bitcoin), people are very much willing to break the law for some profits, and the pseudonymous nature of Bitcoin will make it hard to track down its traders, owners, and users.
Mine empty Bitcoin blocks
The only guaranteed way to bring Bitcoin to a halt, and make it worthless is to participate in the network yourself and disrupt it from within.
It’s part of Bitcoin’s anarchist nature that anybody can take part in the system anonymously, as long as they conform to the rules laid out in the Bitcoin software. For example, no rule states that blocks have to be filled with transactions to be valid, so a miner could theoretically just mine empty blocks.
If all blocks were empty, nobody could transact on the Bitcoin Blockchain, and without the ability to send money, it would become worthless.
With just 10% of the global Bitcoin computing power, an organization could significantly slow down the Bitcoin network. As the evil operation expands, it will eventually reach 50% of the total hashing power, allowing them to keep ALL the blocks empty.
Bitcoin nodes accept the longest valid blockchain as valid, so if a group has more than 50% of the total hashing power, they can eventually create a chain longer than the other, honest miners, who would prefer to fill up their blocks with transactions.
Bitcoin’s founder, the pseudonymous Satoshi Nakamoto, explains:
“The race between the honest chain and an attacker chain can be characterized as a Binomial Random Walk. The success event is the honest chain being extended by one block, increasing its lead by +1, and the failure event is the attacker’s chain being extended by one block, reducing the gap by -1.”
With all that in mind, here’s how to destroy Bitcoin:
Step 1: Buy lots of Bitcoin miners
Currently, the Bitcoin network has a total hashing power of about 5,7 Exahash per second. That’s 5.7 x 10^18 Hashes every second. The latest model of a modern Bitcoin miner, like the Antminer S9, produces about 14 Terrahash per second, or 14 x 10^12.
That means that there is roughly the equivalent of 400,000 Antminer S9s currently in operation in the entire market, which at US$1099 each would cost about US$447 million.
To gain 50% of the total computing power, you would need to add the total of the world’s computing power to the network. As more miners join the network, it becomes more difficult for everyone to mine. If the price of Bitcoin does not rise, it will become unprofitable for others to mine, and you wouldn’t have to try as hard to take over 50% of the total network. You might also be able to build miners for cheaper than what they sell for online, but margins aren’t huge.
An organization should expect to invest around US$350-400 million to get the attack started.
Step 2: Run all the miners
An Antminer S9 consumes 1372 W, so 400,000 Antminers will consume 548,800 kW. Per hour, that’s 548,800 kWh (4,800 GWh per year). For perspective, the largest nuclear power station in the world, the Bruce Nuclear Power Station in Ontario, Canada, generates about 47,000 GWh in a single year.
Bitcoin’s power consumption of 550 MW is about 1/10th of that of a city like San Francisco. So Bitcoin is still small enough that a group could source electricity for the Bitcoin attack on the open market.
Assuming the attacker chose the cheapest power supply available, it would cost around US$0.04-0.06 per kWh, which means ~US$22,000-33,000 per hour for electricity, or roughly US$192 millio