Ethereum Classic suffered a 51% attack last weekend, the second such attack in less than two years. Initial investigations at the time showed no evidence of double-spending.
Ethereum Classic (ETC) price drops after reports of a 51% attack. (Source: TradingView.com)
However, almost a week on, further investigations have revealed that the attacker managed to double-spend 807,206 ETC ($5.6 million) over a two day period.
According to data analysis by Bitquery, the attacker inserted 11 transactions into the re-organized chain. They also noted that the attacker used just 17.5 BTC ($192k) to acquire the hashing power needed to split the chain.
Lightning Strikes Twice
This is not the first time that Ethereum Classic has been attacked. Back in January 2019, attackers performed a 51% attack to double-spend 219,500 ETC ($1.1 million).
The scale of the weekend theft is much greater than the previous attack. This leads many to question the viability of the project going forward.
An article posted in May 2018 titled, “The Realistic Lucrative Case of Ethereum Classic attack — Today,” examined the cost to 51% attack the Ethereum Classic network.
To come to an estimate, the author used the formula:
Total Network Hashrate / Efficient Miner Hashrate = Miner Units needed
Miner Units needed * Miner Unit Cost + Electricity = 51% Attack cost
The network hashrate averaged 7000 GH/s in 2018, while the miner hashrate for an Antminer E3 was 0.18 GH/s.
Therefore 38,888 Antminer E3s were needed, priced at $2,150 each, plus $150k per day for electricity, equating to an estimated cost to attack the ETC network of $85 million.
Since 2018, hashrate on the Ethereum Classic network has dropped substantially. At present, it’s around the 4000 GH/s mark.
In addition, miners have become much more efficient in recent times, with Bitmain’s Antminer S19 Pro able to hash 110 TH/s.
Decreasing network hashrate and increasing miner efficiency meant Ethereum Classic was ripe for attack.
Possible Ethereum Classic Rollback in the Works
Recovering from this will be difficult as security is the foundation of any serious blockchain.
At the same time, immutability should mean what’s done is done.
However, Binance CEO, Changpeng Zhao (CZ) today tweeted that he had received an alert that Ethereum Classic are attempting a network rollback to reverse the attack.
Just got an alert of a roll back involving 4000+ blocks on ETC. Is this true?
Received this after the tweet 2h ago. https://t.co/Ygtsq7PfPp
— CZ Binance (@cz_binance) August 6, 2020
Ethereum Classic came about due to a community split on how to deal with a $50 million theft from a developer app on the Ethereum blockchain.
Some wanted to roll the network back to return the Ether to the rightful owners, others took the view that one of the primary tenets of cryptocurrency is irreversibility.
In 2016, Ethereum underwent a hard fork to modify the code and revert the hack. Whereas Ethereum Classic carried on as it was.
If CZ’s alert proves accurate then it would be somewhat ironic that Ethereum Classic developers chose to roll the network back.
Either way, core developers need to consider long term strategies to defend the network.
Otherwise, it won’t be long before we hear about a third attack.