Monero Price Crashes 17% as Qubic Mining Pool Launches a 51% Attack

In a startling development, the Qubic mining pool has successfully executed a 51% attack on the privacy-focused blockchain Monero (XMR). With this, it has gained control of the majority of Monero’s network hashrate.

For context, a 51% attack occurs when a mining pool or entity gains control of more than half of a blockchain’s hashing power. This dominance allows them to reorder blocks, reverse transactions, and even double-spend coins.

In Monero’s case, which relies on the RandomX proof-of-work (PoW) algorithm designed for CPU mining, Qubic’s strategy of accumulating hashrate has now given it significant leverage over the network.

Charles Guillemet, CTO at Ledger, a major chain reorganization has already been detected, signaling the success of Qubic’s effort. With the current dominance over Monero’s block production, Qubic has the potential to censor transactions and reverse payments.

While the attack could be devastating, it comes with an astronomical cost. Qubic’s dominance of the network is estimated to cost around $75 million per day to maintain, making it a high-risk and expensive endeavor.

This raises questions about the ultimate economic benefits of such a move. Yu Xian, founder of on-chain security firm SlowMist, has out that the financial advantages of this attack are still unclear, especially given the heavy daily cost involved.

Despite the costs, Qubic’s efforts appear to be aimed at forcing the Monero community to take notice of potential vulnerabilities in its security model.

Meanwhile, the news of the attack has already sparked discussion within the Monero community and beyond. Some claim Qubic has effectively executed a rather than a full 51% attack.

In terms of market reaction, XMR has seen a significant drop of around 17%, trading at approximately $248 at the time of writing.

Qubic’s approach is based on a “useful proof-of-work” (uPoW) model that aims to attract external computing power to Monero mining, then converts the mined XMR to stablecoins like USDT. This process is then used to buy and burn QUBIC tokens, creating a deflationary loop for its own token economy.

Qubic’s founder, Sergey Ivancheglo, has been about his intention to demonstrate majority control of Monero’s hashrate between August 2 and August 31. To further emphasize the risks, Qubic temporarily stopped reporting its pool hashrate.

As Qubic’s control of Monero’s network hashrate expands, the development may highlight a fundamental vulnerability in Monero’s proof-of-work model. It could significantly impact the trust that the Monero community and crypto investors have in the network.