Quantum's Race to Break Bitcoin: A Strategic Reassessment of Digital Infrastructure

The rise of quantum computing presents a fundamental, long-term challenge to Bitcoin's core promise. At its heart, Bitcoin relies on elliptic curve cryptography (ECC) to secure digital wallets. The system is built on a one-way mathematical problem: deriving a public key from a private key is trivial, but reversing that process is computationally infeasible for classical computers. This asymmetry is what makes Bitcoin secure.

Quantum computers threaten to collapse this asymmetry. Peter Shor's algorithm, proven in 1994, demonstrates that a sufficiently powerful quantum machine could solve this problem exponentially faster. The time differential is staggering. While a classical supercomputer would need trillions of years to break Bitcoin's encryption, a cryptographically relevant quantum computer (CRQC) could do it in hours or days. This isn't science fiction; it's the imminent risk of a paradigm shift in computational power.

The vulnerability isn't uniform across the entire network. The primary technical weakness lies in older holdings and reused addresses. When a Bitcoin address is used more than once, its public key is exposed on the blockchain. This creates a window of opportunity for a CRQC to derive the corresponding private key and steal the funds. Jefferies' analysis estimates that this leaves 4 to 10 million BTC-representing 20% to 50% of the circulating supply-at immediate risk. This isn't a theoretical attack on future coins; it's a threat to assets already in circulation.

Viewed through the lens of an infrastructure layer, this risk is existential for Bitcoin's store-of-value thesis. The entire concept hinges on the permanence and security of its cryptographic foundation. If a significant portion of the supply can be compromised by a future technology, the network's integrity as a reliable, immutable ledger is undermined. This is why Jefferies, after a 325% gain since its initial allocation, has concluded that from a long-term perspective, the store-of-value concept is now on a less solid foundation. The firm's decision to exit its entire Bitcoin allocation underscores the strategic reassessment required when a foundational technology faces a potential S-curve disruption.

The Compute Power Race: Quantum vs. Classical

The race to break Bitcoin's encryption is not a simple sprint. It is a multi-year contest between two fundamentally different computational paradigms, with 2026 emerging as a critical inflection point. This year is poised to be a pivotal moment where quantum computing begins to demonstrate clearer pathways toward commercial viability 2026 is poised to be a pivotal year where quantum computing begins to demonstrate clearer pathways toward commercial viability. The focus is shifting from raw qubit counts to achieving fault-tolerant, error-corrected systems capable of running Shor's algorithm at scale. A true cryptographically relevant quantum computer (CRQC) is defined as a fault-tolerant system that can break today's public key cryptography within the useful lifespan of the protected data A cryptographically relevant quantum computer (CRQC) is a fault-tolerant quantum system capable of running algorithms like Shor's at a scale sufficient to break today's public key cryptography. The race is now about building the infrastructure for that capability.

Classical computing, meanwhile, is advancing exponentially in its own right. Its path to breaking Bitcoin's elliptic curve cryptography is orders of magnitude slower than quantum's theoretical promise. While classical supercomputers would need trillions of years to crack the math, a CRQC could do it in hours or days hours or days. This isn't just a difference in speed; it's a difference in kind. Classical systems are improving at a linear or polynomial rate, while quantum systems promise exponential speedups for specific problems. The threat isn't from a faster classical machine tomorrow, but from a paradigm shift in computational power that could arrive within this decade.

The tension here is between planning risk and immediate threat. For Bitcoin's long-term security, the existential risk is the potential arrival of a CRQC. The industry's focus is on preparing for that eventuality, with organizations urged to invest in post-quantum cryptography now organisations must invest in post-quantum cryptography (PQC) now to en.... The race is therefore not just about who builds the most powerful machine first, but who can build the most resilient infrastructure to survive the transition. 2026 will be a year of proof-of-concept demonstrations that will either validate the accelerating timeline or reveal the remaining engineering hurdles. The outcome will determine whether the quantum threat remains a distant S-curve or becomes a near-term planning reality.

Strategic Reassessment: From Digital Gold to Physical Resilience

Jefferies' move is a clear signal that the quantum threat is forcing a fundamental reassessment of digital infrastructure. The firm is removing its entire 10% Bitcoin allocation this week, a position that has delivered a 325% gain since its initial setup in December 2020. This isn't a reaction to a price drop. It's a strategic pivot based on a long-term view of technological risk. The capital is being split equally: 5% is flowing into physical gold, and the remaining 5% into gold-mining stocks.

The rationale is straightforward. Gold is viewed as a historically stress-tested store of value, a hedge against the very uncertainties that quantum computing introduces. As Jefferies' strategist noted, the existential issue raised by quantum is long-term positive for gold. While Bitcoin's promise as a digital alternative to gold is now questioned, gold's resilience through centuries of financial and geopolitical turmoil provides a different kind of infrastructure-one built on trust, not cryptography. It's also seen as the best hedge against ever rising geopolitical risks.

This is a long-term pension portfolio decision, not a near-term market call. The firm explicitly states it does not expect the quantum issue to cause a dramatic fall in Bitcoin prices in the near term. The concern is about the foundational layer. For a portfolio designed to last decades, the store-of-value concept must be secure against paradigm-shifting technologies. If a CRQC can compromise a significant portion of the circulating supply, the network's integrity as a reliable, immutable ledger is undermined. The reallocation is a bet on physical resilience over digital promise.

The move underscores a key point in the infrastructure race. While quantum computing threatens to break the digital rails, gold represents a physical layer that has already proven its durability. In a world where the next paradigm shift is unpredictable, the choice is between betting on a new, vulnerable digital foundation or a tested, analog one. Jefferies has chosen the latter.

The Adoption Curve and the Quantum Race

The strategic reassessment triggered by quantum computing is less about a near-term price crash and more about a fundamental shift in the adoption curve for digital infrastructure. The debate itself is telling, with the long-term questions raised by quantum computing seen as "only long-term positive for gold". For a long-term investor, the existential risk to Bitcoin's store-of-value thesis is a clear signal to move capital to a more resilient, analog foundation.

The core challenge for Bitcoin is its security upgrade to post-quantum cryptography (PQC). As David Duong of Coinbase noted, upgrading Bitcoin's security as the central challenge. This isn't a simple software patch. It requires a network-wide consensus to implement new cryptographic standards, a process that is inherently slow and fraught with political and technical friction. The vulnerability is not immediate; the threat is existential but likely decades away, creating a long-term strategic risk. Industry figures are divided on the timeline, with estimates ranging from five years to 40 years. This uncertainty is the market's current reality, but it is a risk that must be priced in for any multi-decade portfolio.

The adoption hurdles for a PQC upgrade are significant. The most vulnerable coins are those from reused addresses, where the public key is already exposed on-chain. According to research cited by Duong, almost 70% of vulnerable Bitcoin comes from address reuse. This means a massive portion of the supply is already in a state of heightened risk, regardless of future upgrades. The complexity of the upgrade is compounded by the fact that the Bitcoin community itself is divided, with prominent figures like Blockstream's Adam Back suggesting the threat is 20 to 40 years away. This internal debate slows the urgency for action, even as external institutions like BlackRock have formally acknowledged the risk in their prospectus.

Viewed through the S-curve of technological adoption, the quantum threat represents a potential inflection point for Bitcoin's growth trajectory. The network's security model, which has been its greatest strength, is now its most vulnerable point. The race is no longer just about compute power; it's about the speed of consensus and the resilience of the protocol. For now, the quantum threat remains a long-term planning risk, not an imminent attack vector. But for a portfolio built on exponential growth, the risk of a paradigm shift in the foundational layer is enough to justify a strategic pivot. The move away from digital gold to physical resilience is a recognition that the next infrastructure layer must be secure against the very technologies that are supposed to power the future.

Catalysts and Guardrails: What to Watch

The strategic reassessment triggered by quantum computing is not a static conclusion; it is a dynamic process that will be confirmed or contradicted by specific signals in the coming years. For investors, the key is to watch the right milestones-proof points that will show whether the threat is accelerating or receding.

The first major catalyst is proof-of-concept demonstrations in quantum chemistry and materials science. As industry leaders predict, 2026 is poised to be a pivotal year where quantum computing begins to demonstrate clearer pathways toward commercial viability. Watch for compelling results in highly coupled electronic systems, where quantum machines show a clear, order-of-magnitude advantage over classical methods. These demonstrations are not just about scientific curiosity; they are the first concrete steps toward building the fault-tolerant, error-corrected systems that define a cryptographically relevant quantum computer (CRQC). Success here would validate the accelerating timeline, while a lack of progress would signal the remaining engineering hurdles are steeper than expected.

The second critical guardrail is the adoption rate of post-quantum cryptography (PQC) standards. The threat to Bitcoin is not theoretical, but the solution requires a network-wide consensus that is inherently slow. Monitor how quickly major tech and financial institutions implement PQC. The Federal government has set a hard deadline of 2035 for migrating its systems, but the private sector's pace will be the true test. A rapid, coordinated industry push would mitigate the risk, while continued delay would leave the digital infrastructure exposed. The debate within the Bitcoin community itself-between those who see a five to ten year upgrade window and others who believe the threat is 20 to 40 years away-will be reflected in this adoption curve.

Finally, track Bitcoin's price reaction to quantum threat narratives and any major security upgrades. The market has shown remarkable resilience to these long-term risks so far. A significant price drop triggered by a major institutional disclosure or a breakthrough in quantum hardware would signal that the threat is being priced in. Conversely, a price rally following a clear PQC standard announcement or a demonstration of quantum progress that is deemed non-threatening would contradict the thesis. The move by firms like Jefferies and BlackRock to acknowledge the risk in their disclosures is already a market signal. The next phase will be seeing if that acknowledgment translates into a tangible shift in capital flows and protocol development.