China could have relatively easily done that previously but now it will be more difficult for any one country to become that non-economic actor with both control over hash rate and the ability to coerce miners.
That's the problem, isn't it? Bitcoin "longs" are very unlikely to profit from a 51% attack, since its success would destroy the speculative value of the currency they hold.
On the other hand, increasing financialization of cryptocurrency allows people and institutions to build up short positions without directly holding bitcoin, and a 51% attack would cause those short positions to pay out. It may not even be illegal to do this, since there's no direct fraud in a 51% attack unless it's used to double-spend.
I wonder whether these two factors -- 51% resources and largest viable short positions -- still differ by an order of magnitude or two.
It’s not about the holders, though. It’s about what the miners decide is best for them. Currently, higher BTC means more profits, but what happens if/when there are proposals to change BTC in ways that make it more eco-friendly? This is where we’d see miners flexing their power over the blockchain.
It’s also not hard to imagine scenarios where the chain forks for whatever reason and the miners go to war trying to discredit or destroy the other fork.
The risk associated with colluding for a 51% attack, the risk of financializing such a huge short position, and the near certainty of your capital investment becoming worthless all mean that this isn't a compelling proposition.
It is of course entirely possible the collateral held by the counter-party securing the borrow is seized in such a scenario (legitimately or not).
My gut feeling is that we aren't yet at the point that you could build an entirely on-exchange short position sufficient to fund a 51% attack, but that may change.
To estimate the cost of a 51% attack, miners currently get 6.25BTC/10 minutes at $35k/bitcoin, so the value of mining is about $32m/day. Rounding that up to even $50m/day to account for transaction fees, that's not very expensive if a hedge fund can build a $1bn short position.
The saving grace might be that you can't rent bitcoin mining hardware in unlimited quantities. A hedge fund might have to own the miners used for the attack, and if executing the attack causes bitcoin's value to drop to near-zero that would also devalue the mining hardware.
You could probably create a pool that grows rather fast if you simply pay more than others this would be possible by not generating any profit form the pool or worst case you could pay on top.
far more likely is a scenario where an existing pool owner or a few collude and pull this off as "exist scam". A crypto winter where the price of BTC drops below the mining cost would be the perfect situation. low hash rate. price of BTC down so not many people shorting and mining hardware cheap form all the miners who went bankrupt. Once a miner/pool has 51% it would eventually make financial sense to kill BTC for a final huge profit rather than slowly going bankrupt as well.
It might also be considered market manipulation to take out a short position on a bitcoin-linked fund or company (like Microstrategy) and then take actions with the intention of changing the price of Bitcoin. That could add enough legal risk to make a hedge fund think twice. I doubt a hedge fund could build a sufficient short position on unregulated DeFi networks, either, especially since blowing up Bitcoin would likely break the peg on at least Tether.
Still, this would seem to leave Bitcoin in an uncomfortable spot: the only reason the "free from government" currency continues to exist may be regulations by those selfsame governments.
Well, you gave the reason yourself why this is not that "easy" ...
Interestingly, it's the same reason why large cartels of several companies, ultimately, are doomed to fail to control the price of their product: In a cartel each member is incentivized to undermine the cartel's price to gain a profit. So usually cartels are effective only for a short time (and, yes, even the oil "cartel").
this is almost verbatim from bitcoin whitepaper. more news a 11?
The minute someone comes up with a 51% attack that actually is in the financial interests of the miners, this becomes easy.
This is likely why it will be so difficult to ever move Bitcoin to a more economically friendly system: The miners will see any attempts coming and use their power to manipulate the system in the direction that benefits continued mining instead of more eco-friendly forks.
Bitcoin mining is a cash cow for a relatively small number of big players who have heavily invested in mining gear. They have no interest in letting this golden goose slip away.
What you are proposing is a zero-fee fork of Bitcoin.