Gandalf wasn't about to let the Balrog get away after pulling him from the fellowship, so he pursued the beast. The two would eventually continue their battle on Durin's Tower, where Gandalf would finally manage to best the beast.He would throw it from the mountain, and the Balrog would die as it fell.
Gandalf the Grey was able to defeat the Balrog (granted, at the cost of his physical form), so the end result would likely be the same for the significantly more powerful Gandalf the White.
Despite popular belief, the Balrog known as Durin's Bane was more powerful than Smaug in Middle-earth, being a literal, primordial demon. Gandalf's decision to fight the Balrog but not Smaug was not based on power levels, but rather on the circumstances and his mission to defeat Sauron.
Sauron was originally Mairon and was a Maiar associated with Aule who valued crafting above all else. Secondly, Balrogs were the epitome of malice and power while Sauron only ever won one of three fights he ever had. Sauron was the great deceiver. His power lies in planning, subterfuge, manipulation, and corruption.
Gandalf's Speech To The Balrog & What It Means | Tolkien Explained
Was Sauron afraid of the Balrog?
Sauron does not fear Durin's Bane because essentially they had been allies back “in the olden days". Both Balrogs (all balrogs) and Sauron chose to serve Melkor/Morgoth.
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. He was his own master in Moria, and no Dark Lord was going to ruin that.
Throughout Tolkien's works, two characters, Gandalf and Glorfindel, faced off against a Balrog, and though they won, the battle cost them their lives. Though Galadriel herself never (as far as we know) went face to face with a Balrog, she would likely have met her match if she did.
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.
The Balrogs were Maiar corrupted by Morgoth during the creation of Arda, who cloaked themselves in shadow and flame and carried whips and swords. Famed Balrogs include Gothmog, slain by Ecthelion, and Durin's Bane, slain by Gandalf.
The Balrogs are essentially demonic equivalents to the wizards. It is hard to fathom the exceptional might of these creatures. With every subsequent age in Tolkein's Middle-earth, the magic in the world diminished, becoming less great in scale.
The Balrogs, or Valaraukar (singular Valarauko, Quenya for "Demon of power"), were three to seven Maiar seduced and corrupted by Morgoth into his service, turning into dreadful Úmaiar and scourges of fire cloaked in shadow.
Gothmog, one of the first Balrogs to become Morgoth's allies in the First Age, is regarded as the most powerful Balrog in Middle-earth. As the High Captain of Angband, he is given the title 'Lord of Balrogs'. Although he carries a fiery whip to battle just like the rest, he is also renowned for having a large black ax.
But it is doubtful that Sauron (without the One Ring) could have commanded the Balrog to say attack Lorien or fight against Minas Tirith. The main powers of a Balrog are not against armies of lesser enemies, or in breaking castle walls, but rather against other powerful opponents like Wizards or Elf-lords.
Understanding the mystery, however, does require at least comprehending what we can. As Johnston summarizes: What we know about Bombadil is that he is a powerful and ancient being, older than Gandalf and older than the elves, and he has no interest in “trinkets” that are used to dominate others.
Still, the dragons proved more effective in battle. Then there's Gandalf the Grey, who managed to kill a Balrog single-handed, but decided to manipulate some Dwarves and one very reluctant hobbit into dealing with Smaug.
Oh, yes, there are creatures more frightful than Balrogs in Middle Earth. Ungoliant who was able to cry havoc in all Valinor is easily more terrifying than Balrogs, even Morgoth feared its gigantic and hideous form. It took a group of Balrogs and Morgoth himself resisting Ungoliant's attack to make her flee.
She also resisted being offered the ring of power by Frodo following his vision in the mirror of Galadriel, an immense test given the ring's seductive powers. Yet Gandalf's power level exceeds even that of Galadriel, as shown by his rebirth in the Two Towers.
Rather than cast magic at Sauron, Galadriel opts to challenge him on the spiritual plane; she resorts to her Wrath form to penetrate Sauron's mind and break his will. She obviously succeeds, as Sauron audibly cries aloud as he flees.
Smaug could easily have cut through the armies of Mordor, and delayed the invasion of Middle-earth by years. So it wasn't in Sauron's interest to take on the dragon, but that doesn't mean he saw it as a lost cause, as he fully planned on creating an alliance.
If the Balrogs are corrupted Maiar, then would Saruman eventually become one? Saruman wouldn't become a Balrog, because his nature is inherently different and he's kind of stuck in the body he's in.
The dwarves of Middle-Earth were notoriously strong willed, able to resist corruption and stay true to their purpose. Sauron had no means by which to corrupt them regardless of how he tried.
