Bernstein says quantum is a ‘manageable upgrade cycle’ for Bitcoin, not an existential threat

Despite quantum breakthroughs, including Google Research’s recent paper demonstrating an approximate 20x reduction in qubit requirements, Bitcoin (BTC) and other crypto protocols still have three to five years to prepare for post-quantum security, according to analysts at research and brokerage firm Bernstein.

Last month, Google researchers said new quantum circuits could enable attacks on the cryptographic systems underpinning Bitcoin’s transaction signatures sooner than expected, potentially requiring fewer than 500,000 physical qubits, sparking renewed debate over Bitcoin’s long-term security. Beyond address types with exposed public keys, the shorter timeline also raises the risk of potential “on-spend” attacks targeting transactions while they sit in the mempool, they warned.

In a note to clients on Wednesday, Bernstein analysts led by Gautam Chhugani said that the emergence of cryptographically relevant quantum computers (CRQCs) poses a known challenge to Bitcoin and the broader crypto ecosystem, as well as all applications utilizing modern cryptographic techniques.

“Recent breakthroughs seem to have accelerated the timeline, as the challenge is no longer ‘a decade away’ as thought earlier,” the analysts wrote. “However, the scaling from 10s of logical qubits to 1000s of logical qubits is not trivial and involves multi-dimensional breakthroughs — quantum timelines may still be more optimistic than reality.”

The Google researchers agreed that the industry still has time to migrate, but warned that the window to transition to post-quantum cryptography is increasingly narrowing, setting a 2029 target for post-quantum cryptography and urging crypto ecosystems to accelerate their preparations.

The Bernstein analysts’ three- to five-year estimate aligns with that timeline, noting that cost and scalability constraints — potentially running into the tens to hundreds of billions of dollars — suggest there is adequate time to transition. They added that well-capitalized players, including Strategy, BlackRock, and Fidelity, are likely to play a “constructive role” in strengthening security.

“The research from Google is a reminder that the requirements are constantly being brought down as hardware ramps up, so it does necessitate the Bitcoin core group to consider the risks,” Chhugani said.

The quantum threat

Quantum computers run on qubits, which can exist in multiple states simultaneously, rather than classical bits that are either 0 or 1, the analysts noted. This enables them to run Shor’s algorithm, which could break widely used public-key cryptographic systems such as RSA and elliptic curve cryptography, including the Elliptic Curve Digital Signature Algorithm used in Bitcoin, but still face significant challenges in scaling, error correction, cycle time, calibration, and manufacturability, according to Bernstein.

However, Chhugani said the risk is “neither existential, nor novel,” and also not limited to crypto, with sectors including financial services, military, and healthcare facing similar challenges. Crypto networks have clear, technically viable paths already underway with post-quantum cryptography replacing these elliptic curve and RSA schemes, he noted, so it will not be an emergency overhaul but more of a protocol evolution with wallet upgrades, address reuse mitigation, and key rotation, in the analyst’s view.

The threat is highest for an estimated 1.7 million BTC in Satoshi-era legacy wallets, Chhugani acknowledged, while for newer protocols, chains, and real-world assets, it is limited to some unsafe practices that can be mitigated, and their management is actively being discussed in detail in the blockchain community, he said.

Meanwhile, Bitcoin mining has “no realistic risk” from quantum computers based on Shor’s algorithm, as SHA-256 hashing used in mining is quantum safe, the analysts said, and would take “several millions of years” despite recent improvements like Grover’s algorithm.

“We think that the quantum should be seen as a medium to long term system upgrade cycle rather than a risk,” Chhugani concluded.

Gautam Chhugani maintains long positions in various cryptocurrencies. Bernstein has received compensation for non-investment banking securities-related products or services from Strategy.