Bitcoin's Security Budget Issue: Problems, Solutions and Myths Debunked

Monero does dynamic block size. It works fine. There is a penalty for large swings in size and that controls the fee which allows the fee to be appropriate during swells and luls in volume.

Bitcoin: lets make it so a medium grade computer and internet connection by 2008’s midrange standards works. Forever.

Solana: let’s make it so that enthusiast grade computers and internet connectivity by 2024’s high range standard works. Sometimes. But keep pushing.

The 100$ fee per transaction is what it would cost to sustain current miner revenue without mining reward (ie. mining revenue derived somewhat invisibly from money supply increase).

The piece is not garbage, but a thoughtful introduction to a problem that's approaching inexorably.

On the lightning network, fees are distributed to rent-seeking intermediaries instead of miners, yet the network is still dependent on the security from the miners. The lightning network is parasitic to bitcoin.

Blocks are empty because people decided that bitcoin was not a feasible means of transaction nearly a decade ago during the blocksize war.

fair challenge to their proposed solution, but it doesn't negate the security premise does it? what do you think is a good alternative?

Like this? https://www.project2025.observer/

Yes, but there will be far greater total demand for transactions because the costs will no longer be prohibitive to certain types of commerce (which has network effects).

Drivechain is an idiotic proposal to just give total control of the network to miners. Atomic swaps already enable the same thing, except without a wealth transfer to miners.

First, that figure is way off. Marathon alone has a market cap over $4B and controls less than 5% of the total hash rate.

Second, the system only seems vulnerable if you ignore economic incentives. A 51% attack isn't just technically difficult - it's economically irrational. Pulling it off would cost billions, and even then, there's no clear way to profit from it. The only scenario where it makes sense is a non-economic actor (e.g. a hostile government) aiming to disrupt Bitcoin. But even then, that investment could be neutralized by a fork that tweaks the mining algorithm, instantly rendering the attacker's hardware obsolete.

Just for the energy: Current hash rate is around 995m TH/s[1]. The best off the shelf miner on the market is the S21 which can hash at ~200 TH/s [2]. Assuming all of the hash rate comprised of S21s without operational inefficiency, we would have ~4,975,000 S21s hashing on the network. They also use up about 16.67 J/TH , which is 3334 J for 200TH. This is what’s expended per second.

The average time to mine a block is 10 minutes so let’s convert our J spent per block for one miner : 33346010 ‎ = 2,000,400. With about 4m of these, that’s about 8 trillion joules per block. Now if we divide that by 3.6m to get kWh, we’re back around ~2m kWh per block. Texas is about 15 cents per kWh so we get about $300k spent per block.

To 51% attack, we’d need to spend a little bit more than that. With full competition, and an attempt to mine empty blocks, it would take about $48m to attack the network for a day (144 blocks). And that’s just back of the envelope math.

Realistically, not everyone has the latest and greatest in mining equipment and probably burn more money with less efficient miners.

And all this is on top of the capex required to acquire 4m S21s, which would be around $10B at around $3k a pop.

[1] https://ycharts.com/indicators/bitcoin_network_hash_rate

[2] https://hashrateindex.com/rigs/bitmain-antminer-s21+

ChatGPT famously can't do math. A pocket calculator can give you the right answer here

Claude deep research estimates that it would cost 20-40b and "vastly exceeds the rational economic gain". Ideological/nation-state motivation would be the only reason to do this.

That market cap would quickly collapse if there was a 51% attack.

I see your ChatGPT generated argument and raise you my DeepSeek generated rebuttal:

1. The $4B "Cost" Is Fundamentally Misinterpreted:

* It's Not a "Cost" Like Buying an Asset: The $4B figure (if accurate) typically refers to the theoretical short-term cost to rent sufficient hashrate to perform a temporary attack. This does not mean you can "buy" control of Bitcoin for $4B.

* Acquisition Cost vs. Rental Cost: Actually acquiring the hardware (ASICs) and infrastructure (data centers, power contracts) needed to permanently threaten the network would cost orders of magnitude more – potentially tens or even hundreds of billions of dollars – and take years. This hardware market is finite and competitive.

* Sustained Cost Ignored: A meaningful attack requires sustained hashrate dominance for a significant time (days/weeks), not just a single block. The ongoing electricity and operational costs for this would be astronomical, likely exceeding the initial "rental" figure many times over during the attack period.

2. Market Cap Does Not Equal "Cost to Attack":

* Apples vs. Oranges: Comparing market cap (the total value of all coins) to attack cost is invalid. Market cap reflects speculative value based on future utility and scarcity. Attack cost is a technical and operational expenditure.

* You Don't "Steal" the Market Cap: Successfully executing a 51% attack does not grant the attacker control over the $2T in Bitcoin. At best, it allows double-spending their own coins or censoring some transactions temporarily. The vast majority of coins remain secured in wallets the attacker cannot access.

* Attack Destroys Value, Not Captures It: A successful attack would catastrophically undermine confidence in Bitcoin, causing its price (and thus market cap) to collapse rapidly. The attacker would destroy the very value they supposedly spent $4B to "access," making the attack economically irrational unless motivated by non-financial reasons (e.g., state-level sabotage).

3. Game Theory & Miner Incentives Are Ignored:

* Miners are Deeply Invested: Miners have billions invested in hardware, facilities, and operations. Their business model relies on Bitcoin having value. Deliberately attacking the network destroys their investment and future income. Honest mining is vastly more profitable long-term.

* Community Defense: The Bitcoin community would detect an attack in progress. Exchanges, businesses, and node operators would coordinate to reject the attacker's chain via a "hard fork," rendering the attack useless and isolating the attacker's resources. The attacker loses everything.

* Security Scales with Value: Bitcoin's security model is designed so that as the value (and thus reward for attacking) increases, the cost of attacking increases even more due to competition driving up hashrate and hardware costs. The $4B figure is a snapshot; a rising price attracts more miners, pushing attack costs higher.

4. Practical Realities Make It Near-Impossible:

* Hashrate Distribution: Bitcoin's hashrate is geographically distributed across thousands of entities and jurisdictions. Coordinating or coercing enough miners to collude for an attack is logistically and politically infeasible.

* Resource Mobilization: Amassing the physical resources (ASICs, power, data centers) secretly and quickly enough to launch a surprise attack without alerting the network is practically impossible at Bitcoin's scale.

* State Actor? Even if a powerful nation-state attempted this (ignoring cost), the detection risk is high, the economic fallout would be global, and the community fork defense would likely succeed, making it a costly failure.

Conclusion: The comparison between Bitcoin's market cap and a theoretical, misinterpreted attack cost fundamentally misunderstands Bitcoin's security model, economics, and game theory. The $4B figure drastically understates the real-world cost and ignores the catastrophic economic consequences for the attacker. Bitcoin's security lies not in it being impossible to temporarily disrupt, but in the immense, sustained, and economically irrational cost required to mount a meaningful and lasting attack, coupled with the network's robust defenses and stakeholder incentives. The imbalance perceived is an illusion created by comparing two fundamentally different metrics.

> How much does the security budget need to be?

There's the famous paper "The Economic Limits of Bitcoin and the Blockchain" [0, 1] answering this question. Bottom line: huge.

> Nakamoto’s novel form of trust faces serious economic limits. It is unusually expensive in absolute terms relative to the stakes involved, and its expense scales linearly with the stakes involved. [...] if permissionless consensus in its pure form were to become a more important part of the global economic and financial system than it has been to date, then the costs of securing the trust would become preposterous — more than all of global GDP in some scenarios.

David Rosenthal has good introductory posts on this [2] in his excellent blog.

[0] Original 2018 version: https://www.nber.org/papers/w24717

[1] Updated 2024 version [pdf]: https://socialsciences.uchicago.edu/sites/default/files/2024...

[2] https://blog.dshr.org/2025/05/who-is-mining-bitcoin.html

https://blog.dshr.org/2018/06/cryptocurrencies-have-limits.h...

https://blog.dshr.org/2019/02/the-economics-of-bitcoin-trans...

https://blog.dshr.org/2024/05/fee-only-bitcoin.html

How much really has to be measured with respect to a motivated attacker. If no one wants to attack it, it could stay low for a long time. The ideal answer would be to keep the hash rate as high as possible for as long as possible. With the appreciation of the asset, people would think the risk of an attack is growing higher but an attacker can only do so much with 51%.

They can either double spend by reversing the chain (in which case they’d have to accumulate enough bitcoin for to make it worthwhile in the first place) or they can mine empty blocks and prevent any transactions from being processed.

>How much does the security budget need to be?

I don't know but I expect it to be proportional to market cap, not getting cut in half forever.

>The original intention was to fund the network entirely off fees eventually.

I think this was a half-baked idea from satoshi. My theory is that the bitcoin distribution was chosen to avoid having to decide on any "arbitrary" emission schedule. Bitcoin basically acts an experiment to determine what level of coinbase reward is safe, through bisection.

>if a genuine 51% attack were to happen people would be highly motivated to counter it. That may involve bringing more compute to the network, or even changing the protocol.

Who? Just bitcoin users in general? There is no group that stands to gain, it's sort of a tragedy of the commons situation.

Bitcoin's security is tied to ASIC hardware. You can't just spin up a couple desktops at home to protect the network anymore.

>A fallback proof of work algorithm that requires more generalised hardware would work well.

I think monero already does this. Look up "RandomX" it is amazing to read about. But the problem is that these CPU-mined coins are even easier to attack because you can easily rent hardware or use a botnet to do a 51% attack. Whereas with bitcoin you need to buy a bunch of ASICs which would be devalued by such an attack.

>Ultimately the network is decided by the consensus of the users. Accepting signed blocks is the consensus.

I was going to write a long response to this, but in a nutshell classical consensus and PoS sucks.

The big issue is the fork and fixing it represents a decision about who has and hasn't gotten paid so the fork is quite sticky for those who's transactions do not appear on the post attack branch to want to stick the the attacked branch. This was relatively easy when they did it in the early days of ETH after the DAO hack but AFAIK there's no on chain mechanism for a similar hard fork to happen to BTC. Even in ETH I'd be surprised if a similar response happened to a similar level of attack, voting power on EIPs was significantly more concentrated back in 2016.

Any way you slice it there's still a centralization of power of when to activate any of these defense mechanisms.

This article has nothing to do with the inflationary or deflationary nature of the currency, this is a problem solely caused by the block size limit, which other cryptocurrencies are free from and don't worry about.