Miners Eye Ethereum Classic Activity As Merger Approaches

Holders of Ethereum Classic (ETC) are cautiously watching the mining activity of their blockchain, as it approaches the merger of Ethereum (ETH) and the transition to the proof-of-stake consensus mechanism puts more attention on the six-year-old cryptocurrency.

The drastic jump in activity could signal a shift in focus for cryptocurrency miners. It can also reduce the risk of a so-called “51% attack” on ETC, which has previously been imposed on the blockchain.

The hash rate of the Ethereum Classic network – a measure of the computational power per second used when mining a cryptocurrency – hit an all-time high on Thursday. According to data from crypto market intelligence firm Messari, the ETC hash rate was 42 terahashes, or 42 trillion hashes per second.

The previous high was 28.32 terahashes last May, coinciding with ETC’s all-time high price of $118.

One likely reason for the increased activity is the fact that the merger will leave Ethereum miners in the lurch, with expensive hardware designed for proof-of-work blockchains useless in the new proof-of-stake model. While some miners want to hard fork Ethereum to keep their livelihood, others may repurpose their equipment to mine other proof-of-work cryptocurrencies, such as Ethereum Classic.

Ethereum Classic is a fork of the Ethereum blockchain that was launched after the Ethereum blockchain had to be rolled back and relaunched in 2016 following the hack of the DAO project, which led to a split in the Ethereum community.

Ethereum Classic risk of attack

Because Ethereum Classic is not among the largest cryptocurrencies – hovering around 19th by market capitalization, according to CoinGecko – many cryptoanalysts worry that it is vulnerable to a 51% attack, where a single party or group can seize control of a blockchain by to handle the majority of transaction validations.

While any blockchain can conceivably face these types of attacks, they are more prevalent in proof-of-work blockchains such as ETC, Bitcoin and – at least for the next few weeks – ETH. However, a 51% attack on Bitcoin is unlikely due to the size of the blockchain and the exorbitant cost of the necessary computing power.

ETC has been targeted in such attacks before, in January 2019 and August 2020.

“Earlier today, @eth_classic $ETC experienced a 3693 block chain reorganisation,” Binance wrote on Twitter in the latter case. “Our alert system caught this immediately and automatically stopped withdrawals and deposits. This looks like it could be a 51% attack.”

Cryptoanalysts have evaluated the risk of another attack on Ethereum Classic at the time of the merger. A contributor to the Ethereum Classic codebase, meowsbits, recently published a detailed risk assessment of a 51 percent attack on ETC.

“Ethereum is planning to move to Proof of Stake in the near future, which will force mining interests,” the report notes. “As the second largest cryptocurrency application of this hash power, it stands to reason that ETC should expect their hash rate to be boosted by at least some of the abandoned miners.”

“If Ethereum Classic achieves the position of the dominant application of the hash power, the risk exposure will be reduced to a minimum,” it adds.

In other words, the recent surge of activity on the ETC blockchain is a good sign, as a high hash rate protects networks from attack.

As for the cryptocurrency itself, ETC hit a four-month high earlier this month, attributed to the pending merger. Currently, the trading price of ETC is $36.36, according to CoinGecko.