Holders of Ethereum Classic (ETC) are cautiously watching the mining activity of its blockchain, as the approaching merge of Ethereum (ETH) and its transition to the proof-of-stake consensus mechanism puts more attention on the six-year-old cryptocurrency.
The drastic jump in activity may signal a shift in focus for cryptocurrency miners. It could also reduce the risks of a so-called "51% attack" on ETC, which have been levied against the blockchain in the past.
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.
A likely reason for the increased activity is the fact that the merge will leave Ethereum miners in the lurch, holding expensive hardware designed for proof-of-work blockchains that are useless in the new proof-of-stake model. While some miners want to create a hard fork of Ethereum to retain their livelihood, others may redeploy their gear to mine other proof-of-work cryptocurrencies, like Ethereum Classic.
Ethereum Classic is a fork of the Ethereum blockchain launched after the Ethereum blockchain had to be rolled back and relaunched in 2016 after the hack of The DAO project, causing a split within the Ethereum community.
Ethereum Classic risk of attack
Because Ethereum Classic is not among the largest cryptocurrencies—hovering around 19th by market cap, according to CoinGecko—many crypto analysts are concerned that it's vulnerable to a 51% attack, where a single party or group can take over control of a blockchain by handling the majority of transaction validations.
While any blockchain can conceivably face this type of attack, they are more prevalent in proof-of-work blockchains like ETC, Bitcoin, and—for the next few weeks at least—ETH. A 51% attack on Bitcoin is improbable, however, due to the size of the blockchain and the exorbitant cost of the needed computational power.
ETC has been targeted in such attacks before, in January 2019, and August 2020.
— Charlie Shrem (@CharlieShrem) January 7, 2019
"Earlier today, @eth_classic $ETC, experienced a chain reorg of 3,693 blocks," Binance wrote on Twitter in the latter instance. "Our alert system caught this immediately and automatically halted withdrawals and deposits. This looks like it may be a 51% attack."
Our alert system caught this immediately and automatically halted withdrawals and deposits.
This looks like it may be a 51% attack.
We will update you as things unfold.
— Binance (@binance) August 1, 2020
Crypto analysts have been evaluating the risks of another attack on Ethereum Classic in the era of the merge. A contributor to the Ethereum Classic codebase, meowsbits, recently published a detailed risk evaluation of 51-percent attacks on ETC.
"Ethereum plans to move to Proof of Stake in the near future, which will forcibly eject its mining interests," the report notes. "As the second largest cryptocurrency application of this hash power, it stands to reason that ETC should expect its hash rate to be augmented by at least some of those abandoned miners."
"If Ethereum Classic achieves the position as the dominant application of the hash power, its risk exposures would drop to a minimum," it adds.
In other words, the recent flurry 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 merge. Currently, the trading price of ETC is $36.36, according to CoinGecko.