Read on Twitter
1/ Just listened to @APompliano and @profplum99’s debate and have a few thoughts on Mike’s assertion that a nation state could attack the #Bitcoin 
network for only $7B per year. This is leaves off a lot of info and requires a long list of assumptions. Clarifying thread:
network for only $7B per year. This is leaves off a lot of info and requires a long list of assumptions. Clarifying thread:
2/ The $7B figure is an estimate of the cost of operating 51% of the hashpower that already exists in the world today on an annualized basis.
How would such a “non-economic” actor acquire that hashpower to pull off the attack?
How would such a “non-economic” actor acquire that hashpower to pull off the attack?
3/ They could totally control years of the worlds chip fab supply for the sole reason of creating new ASICs to attack the network. This has very real 2nd order effects such as forcing the chip fabricators (Samsung, TMC, SMIC) to stop making chips they normally would (Real Cost)
4/ If not creating new ASICs that are used for the attack, then the assumption is that this non-economic actor is instead confiscating existing miners by force. There is only one country that could confiscate enough ASICs on its soil to perform a 51% attack on the network: China.
5/ Therefore, Mike’s fundamental argument is that China can (and will) confiscate miners on Chinese soil for the sole reason of attacking the Bitcoin network. Keep in mind: Mike has also argued that China is benefiting from Bitcoin and using it to “funnel dollars” into China.
6/ But regardless of the conflicting narrative, let’s assume China eventually does this. What has to happen?
China has to perform a coordinated national confiscation of enough ASICs across its country to get to >51%. When it does this it destroys multiple Chinese industries.
China has to perform a coordinated national confiscation of enough ASICs across its country to get to >51%. When it does this it destroys multiple Chinese industries.
7/ Is the destruction the entire crypto industry (exchanges, ASIC manufacturers, service desks, its citizen’s capital, etc) factored into that $7B annual number? No. (If bitcoin dies, these industries suffer)
Regardless, let’s continue down the train of assumptions:
Regardless, let’s continue down the train of assumptions:
8/ China has successfully pulled off the confiscation of the ASICs (assumption: no significant amount of them were destroyed, hidden, or moved), now they have to continually and successfully operate them (assumption)
9/ The world suddenly realizes that the China is attacking the bitcoin network. Do other world governments do nothing? Are there no sanctions or economic or political consequences? Is free trade with China affected by this? These possibilities aren’t factored in the $7B number.
10/ So as China is attacking the Bitcoin network over months, let’s *ASSUME* other Bitcoiners eventually come to no alternative solution other than to change the hash algorithm. Node operators decide to implement this change and ALL of China’s horde of ASICs are made worthless.
11/ The Bitcoin world shifts to CPU/GPU mining. Can China amass enough CPU or GPU power to compete with the rest of the world in hashpower? Definitely not immediately. It would require moving back to (3) in this thread: controlling ongoing chip fabrication with no consequences.
12/ So, as it is abundantly clear to anyone thinking this through, to claim that an ongoing attack of this nature only cost $7B / year requires many extreme assumptions. To claim that China would WANT to do this (while also claiming they are benefiting from it) is imaginative.
13/ To be clear: I have a massive amount of respect for both @APompliano and @profplum99. My goal is to shine a light on the assumptions built into the risk model Mike is promoting which I believe is not inline with reality. Risks exist for #Bitcoin , but please DYOR.
, but please DYOR.
