Monero’s decentralization just got its toughest stress test yet. A single mining pool surged past the critical 51% threshold, reorganized the blockchain, and forced exchange giant Kraken to halt deposits—a move that underscores how fragile even billion-dollar proof-of-work networks can be when mining power concentrates.
The Rundown
- Qubic mining pool claims majority control of Monero, triggering a six-block reorganization in a self-described “demonstration.”
- Kraken suspends deposits citing risk to network integrity, though trading and withdrawals remain open.
- Community split: some call it a textbook 51% attack, others dismiss it as statistical noise dressed up as dominance.
How Qubic Took the Lead
The turbulence traces back to Qubic, a pool linked to former IOTA co-founder Sergey Ivancheglo. Since June, Qubic has lured miners with bonuses tied to its own token, swelling its share of Monero’s hashrate from under 2% to more than 25%.
By mid-August, Qubic claimed it crossed the 51% mark, briefly mining 63 of 122 blocks and pushing through a six-block chain reorg—a rare event that rewrites recent blockchain history. No double-spends or censorship occurred, but the maneuver carried the unmistakable fingerprints of a 51% attack.
Ivancheglo framed it as a necessary wake-up call. “This is a stress test to help the Monero community prepare for future threats,” he said, warning that with so few major pools, an attacker could achieve the same outcome simply by knocking competitors offline.
Kraken’s Security Clampdown
Exchanges can’t afford ambiguity. If a network is vulnerable to majority control, the risk of double-spending attacks becomes real: a malicious actor could deposit Monero, trade it, withdraw the proceeds, and then invalidate the original deposit.
On Friday, Kraken froze Monero deposits, citing “potential risk to network integrity.” Trading and withdrawals remain active, but the freeze cuts off new inflows and signals that one of crypto’s most established exchanges sees unacceptable danger in the network’s short-term stability.
Other venues, such as GodEx, opted for softer measures—simply raising confirmation requirements. Kraken’s harder line highlights the gravity of the situation.
Debate Inside the Community
The Monero community and crypto security experts are sharply divided:
- Alarmed voices: Ledger CTO Charles Guillemet called it a “successful 51% attack.” Security firm Halborn warned it shows that “51% attacks are no longer just theoretical for larger protocols.”
- Skeptics: Developer Luke Parker argued the six-block reorg was a statistical fluke, not proof of sustained dominance. BitMEX Research echoed that view, attributing it to luck rather than true network capture.
- Doubts about Qubic’s data: Analysts at RIAT noted Qubic stopped publishing hashrate figures, relying on internal dashboards that could be manipulated.
Meanwhile, Monero’s market cap has taken a hit. The coin is down 16% over the past week, reflecting shaken investor confidence.
The Stakes for Monero’s Security
The crisis exposes a tension at the heart of Monero: its survival depends on decentralization, but its mining landscape is increasingly vulnerable to concentration. Incentive-driven centralization—miners chasing higher rewards in a single pool—can be just as destabilizing as a direct attack.
For exchanges, perception is reality. Kraken’s move shows that even the appearance of dominance by one pool is enough to shut the doors, cutting off liquidity and rattling markets.
ChainStreet’s Take
Monero has weathered regulatory crackdowns, delistings, and years of scrutiny. But this scare was different—it struck at the chain’s core promise of decentralization.
Qubic’s “demonstration” didn’t empty wallets, but it eroded trust. For exchanges, intent doesn’t matter—outcomes do. A credible claim of 51% control forces defensive action, whether or not the attack is sustained.
The broader lesson: decentralization isn’t a state, it’s a constant fight. Unless Monero finds ways to push miners out of oversized pools and reinforce network distribution, this won’t be the last scare.
For now, Qubic’s dominance has slipped back under 30%, and the network looks steady. But trust is harder to repair than code. Privacy may be Monero’s brand—but decentralization is its lifeline.
