BlackRock Warns of Quantum Computing Risk in Its Bitcoin ETF Filing

Based on reports, the asset manager sees a future risk that ultra-powerful machines might crack the math securing Bitcoin.

Asset manager BlackRock (NYSE:BLK) has added a standard warning about quantum computing to its iShares Bitcoin Trust (BITI) filing, as the firm’s lawyers list out future risks.

What Happened: According to an updated regulatory filing on May 9, Block is now including “quantum computing” among the possible threats to its Bitcoin ETF. The trust is currently investing about $64 billion in net assets, making it the largest spot Bitcoin fund on record.

If quantum processors become advanced enough, they could be used to decrypt private keys and ultimately compromise the security of crypto wallets, according to the filing. It’s a common practice for company lawyers to include every conceivable risk in ETF prospectuses, even if the threat seems far-off or minute.

The fibris of Google (NASDAQ:GOOGL) (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT) chips have crypto investors worried. Credit: Benzinga

Why It’s Important: Last December, Google announced the development of its Willow chip, which can reportedly perform tasks in minutes that would take today’s supercomputers 10 septillion years.

A few months later, Microsoft (NASDAQ:MSFT) unveiled its Majorana 1 qubit, a breakthrough that solves a long-standing challenge in scaling up quantum processors.

These advancements have raised concerns among crypto enthusiasts, as a quantum computer running Shor’s algorithm could theoretically factor the large numbers used in Bitcoin’s elliptic-curve signatures. However, in reality, we are still in the early, noisy intermediate-scale quantum (NISQ) era, and any attempts at real-world attacks on Bitcoin are still at least years away.

Another angle on this topic was brought up by Tether CEO Paolo Ardoino in February, who suggested that once quantum hackers have the capability to break old private keys, they might be able to recover Bitcoin from the approximately 3.7 million coins that are considered lost forever.

Ardoino emphasized that quantum machines are still a long way from being able to crack 256-bit security, so none of these coins will be appearing in any accounts anytime soon.

Crypto analyst Willy Woo quipped that we should be asking which will come first: Google (NASDAQ:GOOGL) (NASDAQ:GOOG) or Microsoft (NASDAQ:MSFT) breaking the key or the government making the first move to claim the coins. He estimates that the roughly $350 billion in lost coins could spark a new wave of investment in quantum technology if those keys ever become vulnerable.

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