Kraken Suspends Monero Deposits After Qubic’s 51% Hashrate Seizure

August 17, 2025 – Kraken has temporarily halted Monero (XMR) deposits following a 51% hashrate takeover by the Qubic mining pool, a rare event that reshaped Monero’s blockchain and reignited concerns about centralization risks in proof-of-work networks.

The Incident

On August 12, Qubic briefly controlled over half of Monero’s hashrate, peaking at 2.6 GH/s. This allowed the pool to reorganize six blocks while orphaning about 60 others. Kraken kept withdrawals and trading open but paused deposits until the network’s integrity could be verified, citing user fund protection.

Qubic’s Role and Justification

Qubic framed the takeover not as an attack but as a demonstration of its decentralized computing power. Its founder claimed the hashrate spike was achieved through optimized resource allocation, with mined Monero rewards converted and burned into QUBIC tokens. In recent epochs, this has led to significant QUBIC burns.

Monero’s developers called the event a temporary disruption rather than a sustained threat. However, critics argue it highlights vulnerabilities in Monero’s RandomX mining algorithm when hashrate concentrates in a single pool.

Community Pushback

This isn’t Qubic’s first clash with Monero. In late July and early August, the pool neared 50% dominance but was pushed back by coordinated miner boycotts and even DDoS attacks from Monero supporters. Qubic’s tactics, including injecting false node lists to deflect attacks, have fueled accusations of “psychological warfare” against the Monero ecosystem.

Market Reaction

Despite the turmoil, Monero’s price rose, with traders betting on the coin’s resilience. Analysts warn that such events expose systemic risks in proof-of-work cryptocurrencies, where economic incentives can drive centralization. While no other exchanges have followed Kraken’s lead yet, the pause has amplified calls for stronger decentralization measures.

Looking Ahead

As of August 17, Qubic’s dominance has declined, and Monero’s network has stabilized. Still, the episode underscores ongoing tensions between innovative mining approaches and the principle of decentralized security. Kraken has promised to resume deposits once safety is confirmed, but the community is now weighing potential protocol upgrades to prevent future hashrate seizures.