In all of Tolkien's text I've read, there are three people who have killed a Balrog. Ecthellion, Glorfindel and of course
We know there was a Balrog in Moria and that only Gandalf seemed capable of slaying it. When it comes to slaying Ainur there are relatively few detailed examples, and only four “canonical” examples at that: 2 deaths for Sauron. Gandalf and the Balrog slaying each other.
During the Wars of Beleriand, Morgoth only came out of Angband on one occasion. Instead, he sent the Balrogs to fight and lead in battle. Two of them were killed in the Fall of Gondolin: Gothmog by Ecthelion, and another by Glorfindel.
So, one glimpse into Smaug's eyes and the Balrog falls under the spell. Even if it's just for a second—a moment of hesitation or distraction, it'd be enough. Smaug would snatch up Durin's Bane and gobble him up with his sword-sharp teeth (and we know swords can kill Balrogs).
Balrogs generally took the form of tall, menacing beings roughly humanoid in shape, though seeming to consist of or be surrounded by shadow and flame. They used both a flaming sword, and a fiery whip; they were constantly burning, and their weapons appeared molten.
The fall of Gondolin and the fall of Troy
The Elf Ecthelion leads the charge against the Orcs, and fights Gothmog, the greatest Balrog; they wound each other and both fall into the king's fountain in Gondolin; both drown.
So, in terms of "angelic rankings," they were on the same level, which meant that Sauron had no authority to commander the Balrog. As a Valar, Morgoth led a whole slew of Balrogs in the First Age, but because Sauron was only a Maia, the Balrog would have had no loyalty to him.
Gandalf was scared of this beast because he knew how powerful it was since it was a Maia like himself, but it was purely evil.
So far I have learned that Galadriel is powerful enough to have a good chance. It is not clear whether she really would have to die or not. I personally think now that beating a Balrog could even be done without much physical power, e.g. by building a trap that will lead the Balrog to drown or fall very deep.
Sauron has been with Melkor since the Years of the Trees. He and the Balrogs fulfill the most important roles in Melkor's regime. He had no reason to fear them because they were his “allies”.
Balrog's main weakness is how reactable his moves are; his dash punches can be recognized and reacted to with a reversal from a distance, or the opponent can just stick out a button and buffer a special off it and not have to react.
Gothmog (Sindarin IPA: [ˈɡoθmoɡ]) was the first Lord of Balrogs during the First Age, and the greatest Balrog ever to walk Middle-earth. He held the title of High-captain of Angband, being Morgoth's front-line lieutenant as well as one of his most important servants.
“Fear” was not an emotion commonly attributed to Balrogs. They were described as aggressive demons, who only fled to the West when faced with the might of the Valar. They were scared of nothing less.
Lord of Balrogs
The most powerful of all the Balrogs, one of the chief servants of Melkor, who held an authority hardly less than Sauron himself. A wily commander and fearsome fighter, Gothmog was often accompanied by others of his fiery kind, and at least in the Nirnaeth he had a personal guard of dozens of Trolls.
Although both the Balrog and Smaug are creatures of fire, and Gandalf is able to match them thanks to the power of his fire ring, defeating the Balrog takes far more spiritual prowess, which is why Gandalf is able to essentially 'level up' and comes back as Gandalf the White, whereas defeating such an immense physical ...
The Eagles came to help them, but Glorfindel fought the Balrog alone upon the pinnacle of a rock. Both died after falling in the abyss, and their duel is sung of by many songs.
For more than five millennia, the Balrog hibernated in his deep hiding place at the roots of the mountains in Khazad-dûm. He remained undisturbed throughout the Second Age and most of the Third, before the mithril-miners of dwarf-King Durin VI awoke him in T.A. 1980.
I was just curious if Durin's Bane had taken The Ring from The Fellowship could they have used it? Yes, anyone can use the Ring.
The balrogs are maiar, and they certainly were highly intelligent creatures, at least to begin with. Yet the balrog encountered by the fellowship behaves in a very nearly bestial fashion, quite unlike the Witch King or even some orcs. Even when challenged by Gandalf, he does not speak.
No, Balrogs do not serve Sauron. Similar to Sauron, Balrogs are Maiar, powerful spiritual beings second only to the Valar themselves. They were corrupted by Melkor's evil before the first age and were made into Valaraukar (Demons of Power).
Gandalf absolutely could have killed Smaug in a one-on-one fight. The grey wizard fought and defeated the Balrog of Moria, and a dragon was a lesser evil than that.
Because the Balrog doesn't care about Sauron, their allegiance is to Morgoth not Sauron, they only see him as their equal. So they have no obligation to even help him.
Peter Jackson certainly makes the assertion in the theatrical and extended editions of the Hobbit movies that Smaug and Sauron are not only well aware of each other, but are planning to ally with each other. Smaug even seems to have detailed knowledge of Sauron's coming plans.
Answer and Explanation: Yes, Sauron knew about the balrog in Moria, as did Saruman, Sauron's lieutenant. However, Sauron did not attempt to recruit the Balrog to his side. The Balrog is a supernatural being who is on a similar level with Sauron.
Smaug's vanity is too strong for him to side with anyone. He is more compelled by fear of loss than hope of gain. Besides he only has his biding in mind when he exacts anything upon anyone.