Monero at Risk: 51% Hashrate Control by Qubic

A long-standing campaign to gain control of over 50% of Monero’s hashrate seems to have succeeded, causing alarm among crypto analysts about the privacy-centric blockchain. Sergey Ivancheglo, founder of Qubic, announced via X that his mining pool has reached "51% over Monero." This level of hashrate control could theoretically enable them to reorganize blocks, censor transactions, or attempt double-spend attacks on the Monero network. He maintains that Qubic's efforts will ultimately bolster the community's resilience against potential threats. According to The Block, Qubic has been working for months to consolidate Monero's hashrate. Their approach employs a "useful proof-of-work" model that incentivizes CPU mining of Monero’s RandomX algorithm and then converts the mined XMR into USDT to purchase and burn QUBIC tokens, creating a deflationary cycle within their token economy. From mid-May to late July, Qubic’s portion of Monero’s global hashrate skyrocketed from below 2% to over 25%, occasionally leading the pool rankings before declining due to pushback from the community, as reported by earlier coverage from The Block. Ivancheglo also announced plans to demonstrate majority control between August 2 and August 31, indicating that Qubic would temporarily refrain from reporting its pool hashrate to spotlight takeover risks. ### What a 51% Attack Means Charles Guillemet, CTO at hardware wallet manufacturer Ledger, stated on X that "Monero seems to be experiencing a successful 51% attack," pointing to a "significant chain reorganization" and asserting Qubic's majority control over the hashrate. He estimated that maintaining this dominance could cost around $75 million per day and warned that miner confidence could quickly dissipate if they risk orphaning blocks. A 51% attack occurs when an entity or group controls the majority of a proof-of-work network's hash power, allowing them to rearrange blocks, censor new transactions, and reverse their payments (known as double-spending). Qubic, targeting general-purpose CPUs through its uPoW strategy, aims to draw external computing power and capital into Monero mining, then recycle the profits by selling XMR for stablecoins to repurchase and burn QUBIC tokens. If successful, this majority hashrate could grant Qubic substantial influence over Monero’s near-term block generation. The sustainability of this strategy relies heavily on whether token appreciation and burn mechanics compensate for the high costs of acquiring necessary computational resources. ### Qubic Scrutiny However, not all industry observers are convinced that Ivancheglo's strategy will yield profits. In an X post on August 12, Yu Xian, founder of the on-chain security firm SlowMist, questioned the economic advantages involved. Concerns also persist regarding the legitimacy of Qubic’s claim to controlling over half of Monero’s hashrate. Lead Developer at SeraiDEX, Luke Parker, contended that Ivancheglo's operation executed a six-block reorganization attack rather than a full-scale 51% attack. Parker also raised questions about the veracity of Qubic's majority hashrate figures, citing difficulties in validating the data as the project has excluded its statistics from public analytics. According to Parker, available information on mining pool stats suggests otherwise and calls into question the legitimacy of the claims: "They might control 51% of the estimated hash rate/mined blocks but less than 51% of the overall hash rate. The numbers, whatever way you slice them, don’t add up." As discussions continue, XMR's value dropped over 8%, trading around $248, with a market cap of $4.6 billion, as The Block’s price page indicates. QUBIC traded near $0.0000023, with a market value of approximately $280 million, per CoinGecko data. Disclaimer: The Block is an independent news organization providing insights, data, and research. As of November 2023, Foresight Ventures is a primary investor in The Block and also invests in other crypto businesses. The Block continues to operate independently to deliver timely, neutral, and impactful news about the cryptocurrency landscape. This article is intended for informational purposes only and should not be interpreted as legal, investment, or financial advice.