Crypto exchange Kraken has suspended Monero (XMR) deposits after confirming that a single mining pool gained control of more than half of the network’s hashing power, raising serious security concerns.
Key Takeaways:
- Kraken halted Monero deposits after one mining pool, Qubic, claimed control of over 50% of the network’s hashrate.
- Monero developers pushed back, while Qubic said it reorganized six blocks following a month-long struggle for dominance.
- The incident underscores the risk of 51% attacks on proof-of-work blockchains with concentrated mining power.
The move follows reports that Qubic, a layer-1 blockchain and mining pool focused on AI applications, claimed responsibility for the attack earlier this week.
Qubic said it reorganized six blocks on the Monero blockchain after surpassing 51% of the network’s hashrate, a threshold that allows a miner to potentially double-spend coins and manipulate transaction ordering.
Kraken Freezes Monero Deposits After Mining Pool Seizes 50% Hashrate
Monero, the 29th-largest cryptocurrency by market capitalization at roughly $6 billion, is one of the most widely used privacy protocols in the digital asset space.
“As a security precaution, we have paused Monero deposits after detecting that a single mining pool has gained more than 50% of the network’s total hashing power,” Kraken said in a statement Friday.
“This concentration of mining power poses a potential risk to network integrity.”
The news of the takeover attempt has rattled its community, with developers and advocates pushing back against claims that the network was successfully compromised.
Qubic alleged that the episode followed a month-long battle for control over Monero’s mining dominance.
The pool initially struggled, falling back to seventh-largest on the network after a distributed denial of service (DDoS) attack on August 4 reduced its hashrate from 2.6 gigahashes per second (GH/s) to just 0.8 GH/s. However, Qubic later restored its power and claimed majority control.
“This event marks a pivotal moment in the crypto industry,” a Qubic spokesperson said, underscoring what they framed as the takeover of a multibillion-dollar privacy protocol by a far smaller AI-driven project valued at around $300 million.
The confrontation highlights a longstanding vulnerability of proof-of-work blockchains, particularly those with concentrated mining activity.
A 51% attack occurs when one party controls the majority of a blockchain’s mining power or stake, allowing them to alter the chain’s history or block transactions.
Qubic founder Sergey Ivancheglo admitted the strategy was designed to monopolize Monero’s mining, eventually rejecting blocks from rival pools.
Monero Devs Dispute Qubic’s Claim of 51% Attack
While Qubic says the event demonstrates it achieved full network control, Monero developers have pushed back.
Luke Parker, lead developer at SeraiDEX, argued that the six-block reorganization doesn’t definitively prove a successful 51% attack, only that “an adversary with a high amount of hash got lucky.”
Others aren’t so dismissive. Zhong Chenming, co-founder of cybersecurity firm SlowMist, said the attack “seems to have succeeded,” warning that Qubic’s pool could now, in theory, rewrite the blockchain and censor any transaction.
The confrontation began in late June, when Qubic announced it was redirecting its proof-of-work model, typically used for AI-related tasks, toward Monero mining.
The mined XMR would fund Qubic token buybacks and burns, creating a direct economic incentive to overpower the network.
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