Ethereum's Recent Decline in Hashrate 'Not Surprising': Cyber Threat Expert Explains

Anthony Sassano, a “cyber threat detection expert” and active contributor to the Ethereum project, observed recently that the ETH price “double bottomed” at around $80 on December 15th 2018.

Sassano, an experienced cybersecurity professional and co-founder of EthHub, a Melbourne, Australia-based organization that focuses on “open source, community-driven Ethereum research,” revealed via Twitter some important Ethereum metrics since mid-December 2018:

Key Ethereum Metrics Since Mid-December 2018

As pointed out by Sassano in his detailed Twitter thread, the number of active Ethereum addresses “actually bottomed at ~177k on Feb 16th 2019.” Moreover, the 24-hour transaction count on the Ethereum blockchain “bottomed at 438k on Feb 16th 2019 as well,” Sassano revealed.

The online security researcher further noted: “Curiously, Feb 16th-23rd 2019 is when the price of ETH increased from $120-$160.”

Ethereum’s Network Usage Has Remained At Or Above 60% “Since Nov 2017”

According to Sassano’s assessment, Ethereum’s “network usage tends to fluctuate wildly due to a variety of conditions and depends on what kind of activity is happening on the network on that day (ICO, big price movements, airdrop etc).” Given that multiple different factors may determine the level of activity on Ethereum’s blockchain, Sassano mentioned that the smart contract platform’s “network usage has not dipped below 60% since Nov 2017.”

Why Ethereum’s Recent Hashrate Decline Is “Not Surprising”

Sassano continued: “The overall hashrate decline is not surprising given the fact that rewards were reduced by ~31% as part of the latest issuance reduction. Plus, investing in mining on Ethereum is a short-term game given the switch to proof-of-stake (PoS) and eventual sunsetting of the Eth1.0 chain.”

Commenting on the Ethereum community’s decision to experiment with programmatic proof-of-work (ProgPoW), Sassano remarked:

I'm also curious to see what happens to the hashrate if ProgPoW is merged into the next network upgrade (Istanbul). I'm personally not expecting a huge drop off & we may see it level out due to GPU miners coming back online. This also depends on the price of ETH, of course.

Bitrue Hacked: $4.5 Million in XRP and ADA Stolen, User Funds Will Be Replaced

At around 17:00 UTC on June 26 or 01:00 on June 27 in Singapore, where digital asset exchange Bitrue is based, a security breach occurred, which resulted in a loss of $4.5 million in crypto from the exchange's hot wallets.

Bitrue, which was founded in 2018, has quickly become a favorite with members of the XRP community because of the high degree of enthusiasm, support, and transparency shown by its management towards XRP. One interesting fact about Bitrue is that it supported XRP as a base currency on the day that its trading platform was launched (19 July 2018). 

At press time (07:57 UTC on June 27), visitors to the Bitrue website are greeted with this message:

Bitrue Hack Announcement.png

Around 02:16 UTC on June 27, Bitrue issued an official statement (via a series of tweets) that explained what exactly had happened, how this impacted its users, and what it was going to do next:

  • At approximately 17:00 UTC on June 26, a hacker or group of hackers "exploited a vulnerability" in the exchange's "Risk Control team's 2nd review process" to "access the personal funds of about 90 Bitrue users."
  • The hackers "used what they learned from this breach" to steal around $4.5 million in crypto—more specifically 9.3 million XRP and 2.5 million Cardano (ADA)—from the exchange's hot wallets and moved these coins to various other exchanges.
  • Shortly after the security breach, this attack was detected and trading, withdrawals, and deposits were all suspended on Bitrue, and the three exchanges where the stolen funds were moved to—Huobi Global, Bittrex, and ChangeNOW—were alerted and asked to freeze "the affected funds and accounts." Bitrue has also "contacted the relevant authorities in Singapore to assist us in tracking down the culprit and retrieving the stolen funds."
  • Because initially it was not quite clear what exactly had happened, the message shown above (about "system maintenance") was posted on the Bitrue website... Bitrue wishes to apologize for "this miscommunication" with its users.
  • Bitrue wants to reassure its users that all "heir personal funds are insured, and anybody affected by this breach will have their funds replaced by us as soon as possible."
  • Bitrue is currently "conducting an emergency inspection of the exchange and hope to be live again as soon as possible with log in & trading functionality." As for withdrawals, they will be "offline for a slightly longer period" while the investigation continues.
  • The flow of stolen XRP can be tracked via the XRP Ledger tool at Bithomp: https://bithomp.com/explorer/rwSvajJ4ZNhjgzcfaJWkEuLh4VURTFHuka

In communication with CryptoGlobe, Bitrue's support team confirmed that:

  • all user funds are "insured up to a maximum value of 1 million USD per user"; and
  • "trading should be back up within a few hours, and at that time users who were affected will already have their lost funds back in their accounts"

A few hours ago, Bitrue CEO Curis Wang posted this message on Twitter:

UPDATE (08:15 on June 27): Bitrue has just released a statement to media outlets to provide further details about this incident:

  • Of the $4.5 million in stolen crypto, 50% was "moved to private wallets," and the other 50% was moved to five crypto exchanges: Huobi, Bittrex, ChangeNOW, Exmo.me, and Coinswitch.co. The first three have frozen the stolen funds that were moved there (worth around $1.35 million). 
  • "This frozen amount should be recoverable by Bitrue in the future after working with the authorities and exchanges."
  • "After recovering the frozen assets, the net loss will be $3.15 million USD." This total "includes $1.89 million USD lost from individual user accounts, and $1.26 million USD lost from Bitrue’s own hot wallet."
  • "The funds lost by user accounts were insured and will be replaced by Bitrue as soon as the exchange resumes service."
  • "Bitrue plans to re-enable log in and trading services by midnight (Singapore time) June 27, i.e. by 16:00 UTC on June 27.
  • "Withdrawals from the exchange will not be possible until the Bitrue team is confident that any security vulnerabilities have been addressed."
  • "Bitrue will continue the planned launch of the trading of their platform token, Bitrue Coin (BTR), on Sunday 30 June 2019."
  • "Bitrue will analyze their automated systems and manual processes to identify any potential vulnerabilities and patch them before they can be exploited."

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