Countdown to Q Day begins? Analyzing how Quantum Computing threatens the foundations of Bitcoin

Original source: decrypt

Original Author: Jason Nelson

Compiled by: Deloris

Saudi Arabia has joined the global quantum computing race.

Saudi Aramco, a government-controlled energy and chemical company, announced on Monday that it has installed its first quantum computer within Saudi Arabia, a move that further intensifies the growing security risks faced by Bitcoin and other blockchain networks.

Saudi Aramco stated that this 200-qubit computer, manufactured by the French neutral atom quantum computing company Pasqal, has been installed at its own Dammam data center, which is specifically designed for industrial applications such as energy modeling and materials research.

Pasqal stated that this is the most powerful system the company has delivered to date. Quantum bits (qubits) are the basic units of a quantum computer.

Loic Henriette, the CEO of Pasqal, stated in a press release: “The deployment of our most powerful quantum computer to date is historic and marks a milestone for the quantum future in the Middle East. Pasqal continues to expand its business footprint, providing practical quantum computing capabilities for the industrial sector.” This move by Saudi Arabia places it alongside countries such as the United States, China, the European Union, the United Kingdom, Japan, India, and Canada—each of which has funded national-level quantum programs aimed at expanding research infrastructure and cultivating the talent needed for future fault-tolerant systems.

Quantum computing seems to be advancing faster than expected. In a blog post on November 13, quantum computing researcher Scott Aaronson (Schlumberger Centennial Chair Professor in the Department of Computer Science at the University of Texas at Austin) wrote, “Given the astonishing pace of hardware development, it is quite possible to build a fault-tolerant quantum computer capable of running Shor's algorithm before the 2028 U.S. presidential election.”

Experts warn that once quantum computers become powerful enough to break encryption systems, they could reveal private keys or forge signatures, allowing attackers to steal funds or compromise privacy protection mechanisms.

In fact, this is also a matter of particular concern for cryptocurrency practitioners. On November 17, at the Devconnect conference held in Argentina, Ethereum co-founder Vitalik Buterin warned during a talk about the Ethereum roadmap that quantum computing could threaten the foundation of the cryptocurrency field—elliptic curve cryptography.

But the question is, is this a serious threat or a blind attempt?

Auh, the founder of Bolt Technology, stated that with the repeated leaps in quantum computing technology, its rapid development forces the security community to confront this threat.

He stated: “Such a massive investment and influx of funds will eventually lead to a breakthrough. Although no one knows the exact timing, the threat is no longer theoretical. Despite current technology still being unable to crack elliptic curve cryptography (ECC) or RSA algorithms, progress continues to move steadily forward.”

Auh stated that national-level investment motives are not limited to the field of cryptanalysis.

“Quantum computing is the first technology that could become a global digital weapon not controlled by any political system,” he pointed out.

However, there is still a long way to go in this research before cracking Bitcoin.

According to researcher Ian McCormack, a system with 200 qubits is relatively small in practical applications because current machines are limited by noise and short coherence times, resulting in a limited number of executable operations.

“200 qubits are enough to conduct some interesting experiments and demonstrations—provided that the qubit quality is sufficiently high, but even with such a small number, it is difficult to achieve. However, this is far from enough to perform error correction calculations, and executing Shor's Algorithm precisely requires this computational capability.” He explained that this quantum algorithm is used for solving the prime factorization of integers.

In September, researchers at the California Institute of Technology announced a neutral atom system with 6000 qubits.

However, even machines of this scale are still used for research, simulation, and algorithm development, rather than for attacking cryptography.

Caltech graduate Eli Bataille stated, “What you need is a very long coherence time, far greater than your operation duration. If your operation duration is one microsecond and your coherence time is one second, that means you can perform about a million operations.”

Researchers say that it would take thousands of error-correcting logical qubits to threaten modern cryptography, which is equivalent to millions of physical qubits.

Although the Pasqal system does not change the current security of blockchain, it has renewed attention to a long-term risk known as “Q Day”, which is the moment when quantum computers are powerful enough to derive private keys from public keys and forge digital signatures.

What is concerning is that this capability could not only undermine the cryptographic technology used by Bitcoin but also compromise many security systems that support the global economy.

“What quantum computers can do - which is closely related to Bitcoin - is forge the digital signatures currently used by Bitcoin,” said Justin Taylor, research partner at the Andreessen Horowitz fund and associate professor at Georgetown University. “Those who own quantum computers could authorize a transaction and take all the Bitcoins from your account without your authorization. That's the scariest part.”

The most advanced processors today, such as the 200-qubit Pasqal machine and Google's 105-qubit Willow chip, are still far below the attack threshold.

“Quantum computing poses a significant and potentially life-threatening long-term risk to Bitcoin and other cryptocurrencies with a probability greater than 5%,” said Christopher Peikert, a professor of computer science and engineering at the University of Michigan. “However, in the next few years, it is still unlikely to pose a real threat; quantum computing technology has a long way to go before it threatens modern cryptography.”

Compared to the distant threat of quantum computing, the immediate challenges that Bitcoin faces are much more severe.

The market is continuing to deteriorate. Last Friday, the price of Bitcoin plummeted again, falling to $82,000. Although it has slightly rebounded now, it has only returned to $87,000, nearly a 30% drop from its historical high.

More concerning is that, based on market reaction, this decline may continue. Capital is continuously flowing out. From the ETF perspective, the outflow of funds from Bitcoin exchange-traded funds (ETFs) reached $3.5 billion in November, marking the largest single-day outflow since February. “This indicates that institutional investors have stopped allocating Bitcoin,” said Marcus Thielen, founder and CEO of 10X Research. “ETF institutions have turned into sellers, and as long as they continue to sell, I think it will be difficult for the market to maintain an upward trend or rebound.”

Companies in the crypto treasury sector that are highly reliant on the appreciation of cryptocurrency values are showing more apparent signs of withdrawal. According to the Financial Times, as the cryptocurrency market faces a severe downturn, those companies that previously hoarded crypto assets to enrich their treasury are now facing dual blows from both stock prices and cryptocurrency prices. To support their plummeting stock prices, these companies are being forced to sell off their held digital tokens. FG Nexus, an Ethereum holder based in North Carolina, recently sold approximately $41.5 million worth of tokens to fund its stock buyback program. The company's market value is $104 million, which is lower than its $116 million in held crypto assets. ETHZilla, a life sciences company based in Florida, also sold around $40 million worth of tokens for its stock buyback.

Retail investors are also showing a defensive posture. Santiment released data indicating that since November 11, the number of wallets holding at least 100 bitcoins has increased by 0.47% (91 wallets). Meanwhile, the number of small wallets (especially those holding 0.1 bitcoins or less) has been decreasing.

Of course, there is also some optimistic news, as the Federal Reserve's monetary policy is showing a more “dovish” stance. According to the CME “FedWatch”: the probability of the Federal Reserve cutting rates by 25 basis points in December is 84.9%, and the probability of keeping the rates unchanged is 15.1%. The probability of the Federal Reserve cumulatively cutting rates by 25 basis points by January next year is 66.4%, with a probability of keeping the rates unchanged at 11.1%, and the probability of a cumulative cut of 50 basis points is 22.6%.

Various factors are intertwined, making market predictions increasingly difficult. However, from the perspective of traders, it is generally believed that the market will enter a consolidation phase, with 90,000 becoming a key threshold.

The head of lending trading at Galaxy Digital, Beimnet Abebe, stated that he believes the top of this cycle has likely been established. In the short term, it will be difficult for prices to return to the $120,000 to $125,000 range. For now, the $90,000 level is likely to pose strong resistance.

Coindesk analyst Omkar Godbole stated that the first resistance level Bitcoin is focusing on is the 200-hour simple moving average (SMA), currently close to $88,000. Since Monday, this position has been acting as a resistance level for price upward movement, limiting the extent of the increase. The next resistance level to watch is in the $98,000–99,000 range, which previously formed intraday lows multiple times earlier this month and in June of this year.

In addition, the key support level is around $83,680, which is the intersection of the 100-week SMA and the macro bullish trend line. If this level is broken, it will send a clear risk signal, confirming the recent bearish shift and possibly leading to a deeper decline. The next support to stop the decline is around $74,500, where selling pressure eased in early April, paving the way for a subsequent price rebound.

Delphi Digital analyst that1618guy proposed two possibilities: in an optimistic scenario, the market may break through $103,500 after completing a correction, while in a pessimistic scenario, the rebound may be hindered in the range of $95,000 to $99,000, followed by a drop to around $75,000.

Even Arthur Hayes, who usually speaks favorably, has changed his tune, believing that the price of Bitcoin will remain below $90,000 and may retest the effective support level of $80,000.

And more pessimistic cryptocurrency analyst @ali_charts even stated that the key support levels may be at $75,740, $56,160, and $52,820.

Of course, there are still institutions with an optimistic outlook, but they are more focused on ETH. Yi Lihua, founder of Liquid Capital, stated on social media today: “From investment research data, ETH is being heavily shorted by multiple platforms and institutions. I believe that after surviving the toughest November, it may welcome a short squeeze in the future. Compared to ETH four years ago, under the completely different levels of favorable conditions such as stablecoins/ETFs/DAT/policies, the price of ETH is severely undervalued.”