A 51% attack on a blockchain network refers to when more than 50% of the network’s hashrate is controlled by a malicious group of miners or a single entity, potentially allowing the attackers to halt payments between some or all users and even double spend. The controversial Ethereum (ETH) hard fork, Ethereum Classic (ETC) fell victim to two consecutive 51% attacks lately in less than a week.
On August 1, Ethereum foundation member Hudson Jameson tweeted that there was a “problem” with the ETC blockchain and that “Exchanges need to pause deposits and withdrawals”.
It was soon revealed that the network had been subjected to a 51% attack that resulted in losses worth $5.6 million due to double-spending.
Per a report published by Aleksey Studnev of blockchain forensics firm Bitquery, the attacker managed to get away with approximately 807,260 ETC.
What’s interesting is that the cost to execute the attack was roughly 17.5 Bitcoins (BTC) worth $192,000. So, by renting hash power from Nicehash, the attacker was able to make a whopping 2,800% return on his investment with minimal efforts.
The attack was executed between July 31 and August 1, prior to which the attacker had mined 4280 blocks over four days.
It then spent more than 12 hours to execute several private transactions that by transferring ETC from an exchange wallet under its control, and then back again, before broadcasting the blocks containing transfers to their wallets to reorganize the blockchain.
11 malicious transactions were generated from a single wallet which was believed to be hosted on either OKEx or one of the exchange’s affiliated companies.
Is ETC network security a joke?
In less than a week, the ETC blockchain was under attack yet again as Etherechain.or notified users on Twitter that popular mining pool Ethermine has disabled ETC payouts as more than 4000 blocks were reorganized in the present attack.
Expressing his views on the matter, Ethereum founder Vitalik Buterin said:
“ETC should just switch to proof of stake. Even given its risk-averse culture, at this point making the jump seems lower-risk than not making it.”
As crypto51 notes, the cost to execute a one hour 51% attack on the ETC blockchain is just over $15,000, using rented hash power from NiceHash, even though the platform offers 32% more than what is required to pull off the attack.
It is unclear if the second attack was executed by the same attacker or someone who was inspired by the first attack.
This wasn’t the first time for ETC, back in January 2019, another 51% attack was executed on the network with losses amounting to be around $1.1 million.
The crypto community is now concerned about the network security for ETC, but despite the recent attacks the token managed to stay above $7 and is down 1% on the daily.