Is it more expensive to attack a Proof-of-Stake (PoS) network compared to a Proof-of-Work (PoW) one? BitMEX’s latest report digs into this debate, challenging the idea that PoS systems are harder to compromise. 

The key here is comparing the cost of renting versus buying the necessary resources for an attack.

Renting vs. buying: The cost dynamics

Let’s start with the basics. To attack a PoW network like Bitcoin, you’d need to control 51% of its mining power. 

Miners make about $10 billion a year, so renting enough hash power to attack the network would be a huge expense. But what if you only need to offer a little more to entice miners? 

A 20% premium on their annual income means you’d need around $12 billion. After subtracting potential earnings from mining, BitMEX said the net cost could be about $2 billion per year.

On the other hand, PoS networks like Ethereum require attackers to control a large portion of the staked coins. Stakers earn around $3 billion annually.

Applying the same 20% premium, the cost to rent enough staked Ethereum would be roughly $3.6 billion per year.

However, only a third of the total stake is needed to disrupt the network, bringing the annual cost down to about $1.2 billion.

According to BitMEX, this comparison isn’t perfect but highlights that PoS might not be as expensive to attack as some think. They argue that 

“When normalizing for market capitalizations, the cost to attack is about the same, with Bitcoin around three times larger.”

A more permanent threat

If an attacker wanted to go all in, they’d need to buy and build—acquiring mining hardware for PoW or purchasing staked assets for PoS. 

For PoW networks, this means buying up to 51% of the mining hardware, which could be a long and costly process, possibly taking years and billions of dollars.

For PoS, if someone like Elizabeth Warren’s fictional anti-crypto department tried to buy up a third of the staked Ethereum, it could cost up to $100 billion. This could trigger a surge in markets.

BitMEX points out that this attack could be counterproductive: