Breaking ChatGPT’s Bitcoin FUD #8: Mining Centralization – part 3

Breaking ChatGPT’s Bitcoin FUD #8: Mining Centralization – part 3...

Breaking ChatGPT’s Bitcoin FUD #8: Mining Centralization

Vlad Costea's "Breaking FUD" series continues with the 8th "top threat" to Bitcoin according to ChatGPT. Vlad finishes obliterating the FEAR (False Emotions Appearing Real) around Bitcoin mining being supposedly centralized.

On to the segment from the e-magazine "BTCTKVR 3: Breaking FUD", released May 2023. I'll keep posting the rest of this e-magazine over the coming days.

"Breaking ChatGPT’s Bitcoin FUD #8: Mining Centralization – part 3

51% ATTACK, MINING, BITMAIN, CHINA / USA, POW

Though the pool itself is responsible for coordinating the participants, decentralizing limitations are set in place thanks to software innovations such as Stratum V1 (the industry standard since 2012) and Stratum V2 (a newer standard that’s currently implemented by Braiins and offers even more decentralization through allowing individual miners to negotiate their own transaction sets). It’s even more difficult for a pool to attack Bitcoin if the miners have the autonomy to opt out from certain types of transactions.

What is the cost to launch a 51% attack, though?

As of May 2nd 2023, when the hash rate is 322 EH/s and the price is $28,700, it costs about $1.27 million US dollars per hour to rent the hardware that can pull off this attack. In the last hour, thanks to a combination of full blocks and high fees, Bitcoin has produced $1.6 million worth of coins. Theoretically, an attacker could have made $0.33 million in profits – assuming that the majority lasted for so long and other miners didn’t turn on more machines to dilute the 51%.

However, this model is purely theoretical. Mostly because there aren’t enough machines that an attacker can rent to use against the Bitcoin network. Currently, Proof of Work mining on Bitcoin uses a SHA-256 hashing algorithm which requires dedicated hardware. Due to limited and specialized demand, these ASIC miners are only made in a few places around the world and their supply is always limited. In hindsight, this scarcity of devices is oligopolistic and bad for the average Bitcoin enthusiast who wants to mine from home. But in practice, this means that enemies of Bitcoin must invest extra resources to purchase the hardware, run it in areas where excess energy is available, and start an initiative that might as well fail.

Back in January 2021, Braiins published an article which does some basic math about what a successful 51% attack requires. At the time, the hash rate was 150 EH/s. In the meantime, it doubled. So if we use their model and assume that the current miners remain honest and the attacker must get at least the same amount of hash rate (300EH/s), and there’s also an unlimited availability of Antminer S19 XP Hyd mining devices that do approximately 257 TH/s each, then at least 1167315 units are necessary to initiate the attack. Never mind that Bitmain’s production can’t accommodate this type of demand, let’s assume that a nation state actor is able to get what they want or else build their own hardware in a secret factory.

What we should take into account now is that every single Antminer S19 XP Hyd device consumes 5346 watts per hour. 5346 multiplied by 1167315 is 6.23 GW/h. This amount of energy is immense and it would be very difficult to find it among excess sources without causing disruption in places that require electricity. Only powerful nation states such as China, Russia, and the United States can theoretically mobilize to deploy such a large-scale attack. But in reality, given how one Antminer S19 XP Hyd costs $10000 and they’d have to spend $11.67 billions in taxpayer money only for an attempt (and then pay for electricity and personnel), it’s much easier and cheaper for them to launch social attacks which actively discourage the use of Bitcoin: they can push regulations, they can spread all sorts of FUD, and they can leverage financial mechanisms to suppress the price on compliant trading hubs within their jurisdiction.

At this point, some would ask, “isn’t it easier for Bitcoin to migrate to Proof of Stake and leave behind this complicated game theory with likely attack vectors from global superpowers?”. Well, the answer is a clear no. Proof of Stake is a “one coin, one vote” system that can’t function without a concerning degree of centralization. Assuming that a nation state wants to attack Ethereum, Cardano, or any other Proof of Stake system, all it has to do is threaten with harsh regulations to crash the price and then print money to acquire a majority of coins. Then it’s game over for the entire system, as the largest stake is in control of governance.

Attacking Bitcoin requires investing money in hardware and electric energy. And even if you do everything by the book and deploy the most successful attack in which the USA and China collaborate, it’s still likely that the users will fork off to migrate to another chain which copies the pre-attack history of the previous network and changes the mining algorithm to turn any further attack into a waste of resources.

Bitcoin has never had a successful 51% attack specifically because the game theory system works. There’s geopolitical competition between nations, there’s electricity efficiency competition between miners, and the incentives to play by the rules are stronger than the consequences of attacking. Thinking about 51% attacks against Bitcoin is a nice intellectual exercise and the idea of this threat is useful in keeping honest miners in check (if they care about the network, they will consider migrating to smaller pools). But in practice, it’s a nightmare to successfully undergo.

Sorry ChatGPT, but you’re taking another big loss here.

SCORE
Vlad 8
ChatGPT 0 "

Vlad has defeated Bitcoin Mining Centralization FUD from the misinformed AI known as ChatGPT.

I'm Charles Polanski and I seek to turn the Bitcoin-curious into Bitcoin investors and enthusiasts.

Thanks to Vlad for making this excerpt available to freely spread.
Find him on Twitter: @TheVladCostea
"Your Bitcoin influencer's influencer."
Host of the Bitcoin Takeover Podcast
Writer of the open source @btctkvr mag.
Check out his work: http://linktr.ee/btctkvr