Why the Chinese miners won’t carry out a 51% attack on Bitcoin


14. August 2020

 

China accounts for more than half of Bitcoin’s mining capacity worldwide, but Jameson Lopp, co-founder and CTO of Casa, has quelled fears that Chinese miners pose a threat to Bitcoin in an Aug. 9 blog post.

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While many people have expressed concern about the high concentration of hash power found in China, Loop noted that even in the case of a 51% attack on Bitcoin, the attackers would be limited in what they could actually do.

He explained that attackers cannot arbitrarily steal people’s Bitcoin or change the rules of consensus. They cannot reverse valid transactions. All they can do is spend twice as much of their own Bitcoin.

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The best way for a 51% attacker to get the most out of it is to remove „stablecoins“ from cryptomoney exchanges. However, this presents major problems in terms of withdrawal limits and know-your-customer requirements between exchanges. It also makes little economic sense for attackers to throw away a large portion of Bitcoin at once:

„The value of the Bitcoin they still have after the attack will probably have decreased substantially, so a large successful attack could result in a shot in the foot. They’d better not make a mistake while accessing the exchange they’re aiming at. For example, a hacker returned $25 million in stolen funds after leaking your IP address.

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Loop believes it would be nearly impossible for a nation state to have total control of mining facilities and for Bitcoin stakeholders not to take immediate emergency action against such an act.

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Even if the attack moves from targeting individual mining facilities to an easier mining attack, 70% of the hash power in China is coordinated through fewer than 10 mining groups, switching mining groups is incredibly easy for the miners. It is also difficult to do so discreetly, as there are many independent companies that issue social media alerts against malicious actors.

„It is difficult to imagine a scenario where a state actor is able to quickly and discreetly take over enough hash power to carry out a continuous attack lasting more than a few hours.

According to Lopp, the reason why hash power has been concentrated in China since 2015 is due to the fact that most of the mining chips are produced in Asia. Most importantly, China also has „an abundance of cheap energy“, with the political and economic stability to facilitate mining infrastructure.

Jameson Lopp: China’s mining dominance is unlikely to last
Loop concluded by noting that any large-scale mining attack will be „limited in its effectiveness. As Cointelegraph reported earlier, in the long term, competition in semiconductor production and cheaper energy sources will continue to increase globally and China’s mining dominance will not last.

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