Qubic Sparks 51% Attack on Monero Network, XMR Dips 10% in 24 Hours

Monero, a privacy-focused cryptocurrency, has become the subject of growing concern after the community detected signs of a potential 51% attack by Qubic, a mining project that has reportedly gained control over a significant portion of the Monero network’s hashrate. On-chain observers identified a chain reorganization, indicating that an entity—Qubic—may have the capability to alter block history, creating risks of double-spending and undermining the decentralized nature of the network [1].

Qubic, led by Sergey Ivancheglo—a co-founder of IOTA and known in the crypto space as ComeFromBeyond—has incentivized miners by offering higher guaranteed block rewards, thereby attracting a large portion of the network’s hashrate. This strategy has enabled Qubic to consolidate control, with the potential to orphan blocks mined by other participants and dictate the network’s history [1]. Despite Monero’s reliance on CPU and GPU mining, which is typically more distributed, the project managed to amass enough hashing power to challenge the network’s decentralization [1].

The attack is estimated to cost around $75 million per day to maintain, given the energy-intensive nature of Monero mining and the limited block reward distribution. Analysts suggest that while 51% attacks are often short-lived due to their high cost and low profitability, the event raises questions about the long-term sustainability and security of proof-of-work blockchains with relatively low hashrate [1].

In response, the Monero community mobilized quickly. Miners began redirecting their hashing power away from Qubic, causing the pool’s hashrate to drop from nearly 45% to under 14% within hours. This rapid response showcased the resilience of the community in defending the network’s decentralization [1]. However, the damage was already reflected in the price of Monero, which dropped over 10% in 24 hours, hitting a three-month low of $246.98. This decline was exacerbated by prior concerns over market manipulation and stolen Bitcoin laundering, compounding investor anxieties [1].

The broader implications of the event highlight vulnerabilities in the proof-of-work model, particularly for smaller chains with lower hashrate. While Qubic’s stated aim appeared to be economic incentive optimization, its actions have exposed the potential for malicious manipulation. The project has also liquidated half of its rewards into USDC to boost its native token, QUBIC, which traded at $0.000002 at the time of the attack [1].

Despite the swift community response, concerns about network centralization and future vulnerabilities remain. The incident serves as a cautionary tale for developers and miners alike, emphasizing the need for protocol-level improvements to ensure a more distributed and resilient mining ecosystem. For now, Monero faces an uncertain path forward, with the balance between security, decentralization, and economic incentives at the heart of ongoing debates.

Source: [1] Monero Network Hit by Qubic-Led 51% Attack Attempt ... (https://blockonomi.com/monero-network-hit-by-qubic-led-51-attack-attempt-xmr-price-dips/)