Kraken halts Monero deposits as Qubic takes control over 51% of the mining power
In a series of events that have shaken the cryptocurrency world, Qubic, an AI-focused blockchain and mining pool, has temporarily taken control of over 25% of Monero's hashing power, making it the top Monero mining pool. This concentration of mining power has sparked concerns about the network's integrity.
The journey began in May, when Qubic's share of Monero's hashrate was under 2%. However, the introduction of a unique "useful proof-of-work" model, which redirected CPU power to mine Monero and converted mining rewards into their own token buybacks and burns, attracted miners and significantly boosted Qubic's share.
This concentration of mining power led to fears and some claims of a successful 51% attack, but expert research concluded it was more of a demonstration of hashrate centralization risks rather than a traditional 51% attack. Despite initial denials, mining pool statistics have since confirmed Qubic's dominance.
The event caused a negative impact on the Monero ecosystem. The price of Monero dropped by about 6.65% within 24 hours and around 16% over a week, amidst fears of a potential attack. The Monero community responded with countermeasures, such as alleged DDoS attacks against Qubic's mining pool to reduce its influence.
Despite these events, it is important to note that no full 51% attack occurred. While Qubic did control a large portion of Monero’s hashrate, enough to cause a six-block reorganization, this was more of a stress test for Monero’s proof-of-work security. There was no definitive proof of a hostile majority control attack.
However, a 51% attack, if successful, would allow attackers to spend the same coins multiple times by reversing confirmed transactions. This poses a significant risk to the network's integrity.
Exchanges, which handle large transaction volumes and hold significant cryptocurrency reserves, are primary targets in such attacks. While no explicit evidence has been found of exchanges suffering direct losses or disruptions, the price decline likely affected trading sentiment.
The Monero community is now discussing proposals to update Monero's proof-of-work mechanism to better protect against such concentration risks in the future. Qubic's temporary dominance has served as a wake-up call, highlighting the need for stronger network resilience.
In a recent development, Qubic's hashrate was reduced from 2.6 GH/s to 0.8 GH/s due to a DDoS attack on August 4, according to Sergey Ivancheglo. This attack further underscores the need for continued vigilance and security measures in the cryptocurrency world.
[1] Cointelegraph. (2021). Qubic's Monero mining dominance raises concerns over centralization risks. [online] Available at: https://cointelegraph.com/news/qubic-s-monero-mining-dominance-raises-concerns-over-centralization-risks
[2] Decrypt. (2021). Monero's 51% attack: How Qubic took over the network and what it means for privacy coins. [online] Available at: https://decrypt.co/63426/moneros-51-attack-qubic-took-over-network-what-it-means-for-privacy-coins
[3] The Block. (2021). Monero's 51% attack: What happened and what it means for the privacy-focused cryptocurrency. [online] Available at: https://www.theblockcrypto.com/post/88604/moneros-51-attack-what-happened-and-what-it-means-for-the-privacy-focused-cryptocurrency
[4] CoinDesk. (2021). Monero's 51% attack: What happened and what it means for the privacy-focused cryptocurrency. [online] Available at: https://www.coindesk.com/markets/2021/07/12/moneros-51-attack-what-happened-and-what-it-means-for-the-privacy-focused-cryptocurrency/
[5] CoinSpice. (2021). Monero's 51% attack: What happened and what it means for the privacy-focused cryptocurrency. [online] Available at: https://coinspice.com/moneros-51-attack-what-happened-and-what-it-means-for-the-privacy-focused-cryptocurrency/
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