Third 51% Attack in a Month Rocks Ethereum Classic as Exchanges Consider Delisting ETC

Ethereum Classic suffered its third 51% attack in the month of August 2020, as hackers reorganized more than 7,000 blocks — roughly two days of mining — in the latest blow to the beleaguered blockchain network. The attack, detected on August 29 by Austrian mining company Bitfly, has intensified concerns about the long-term viability of ETC as a secure cryptocurrency.

TL;DR

• Ethereum Classic hit by third 51% attack in August 2020
• Hackers reorganized over 7,000 blocks, equivalent to approximately two days of mining
• Previous two attacks resulted in nearly $9 million in double-spend transactions
• OKEx suffered approximately $5.6 million in losses from earlier attacks
• ETC Cooperative is working on security upgrades but solutions remain unimplemented

A Pattern of Exploitation

This latest attack follows two previous 51% attacks on Ethereum Classic earlier in August. The first attack, spotted by Bitfly on August 1, and a second attack shortly after, together resulted in the reorganization of approximately 8,000 blocks and netted attackers nearly $9 million in double-spend transactions. The third attack alone reorganized over 7,000 blocks — nearly as many as the first two attacks combined.

Cryptocurrency exchange OKEx bore the brunt of the earlier attacks, disclosing losses of approximately $5.6 million in ETC. The exchange stated that the loss was fully absorbed by OKEx and not passed on to users, but the incident prompted a stern warning. OKEx announced it would consider delisting ETC entirely, pending the results of the Ethereum Classic community’s efforts to improve chain security.

Why Ethereum Classic Is Vulnerable

The root cause of ETC’s vulnerability lies in its relatively low hash rate compared to major networks like Bitcoin and Ethereum. Because Ethereum Classic uses the same Ethash mining algorithm as Ethereum, miners can easily redirect their computational power between the two chains. When ETH mining is more profitable, miners abandon ETC, leaving the network with insufficient hash power to resist attacks.

This dynamic makes it relatively inexpensive for an attacker to rent enough hash power through services like NiceHash to temporarily gain majority control of the ETC network. Once in control, attackers can reorganize blocks and execute double-spend attacks — spending the same coins twice by rewriting transaction history.

At the time of the attack, Bitcoin was trading at approximately $11,711 and Ethereum at $428.40, according to CoinMarketCap. ETC’s price fell 1.68% following news of the attack, reflecting diminishing market confidence.

Exchange Reactions and Market Impact

The repeated attacks have had tangible consequences for ETC’s market standing. Coinbase listed Ethereum Classic as experiencing “degraded performance” following the attack, a designation that could deter institutional investors and retail traders alike. The specter of delisting from major exchanges represents an existential threat to ETC’s liquidity and relevance.

For users holding ETC on exchanges, the attacks raise serious questions about asset safety. When a blockchain can be repeatedly compromised, the fundamental promise of cryptocurrency — trustless, immutable transactions — is undermined. Each successful attack erodes confidence not just in ETC, but in the broader credibility of proof-of-work networks with limited hash rates.

Proposed Solutions Remain Stalled

The ETC Cooperative, the non-profit organization overseeing the Ethereum Classic blockchain, acknowledged the attack and stated it was “working with others to test and evaluate proposed solutions as quickly as possible.” Two draft proposals to change Ethereum Classic’s mining algorithm exist on the ECIP (Ethereum Classic Improvement Proposal) repository, but neither has been implemented.

Changing the mining algorithm could prevent attackers from easily renting hash power, but it would also disrupt the existing ETC mining ecosystem. The community faces a difficult trade-off between security and the economic interests of current miners.

Why This Matters

Three 51% attacks in a single month is not a bug — it is a systemic failure. Ethereum Classic’s experience serves as a cautionary tale for the entire cryptocurrency industry about the security implications of low hash rates on proof-of-work networks. As DeFi continues to grow — with total value locked reaching $7.88 billion in August 2020 — the importance of robust blockchain security cannot be overstated. Investors should carefully evaluate the hash rate and security posture of any proof-of-work network before committing significant capital. The ETC situation also highlights the broader debate about whether smaller proof-of-work chains can maintain adequate security without the economic incentives that protect Bitcoin and Ethereum.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research before investing in cryptocurrency.