Ethereum Network Suffers from Block Reward Cut and Hash Rate Collapse
The Ethereum network faced its defining moment in 2016 when the DAO vulnerability led to a devastating hack. The project raised $150 million from over 11,000 participants through an initial coin offering (ICO) that lasted 28 days. However, the smart contract code contained a re-entrancy bug that an attacker exploited on June 17, 2016, siphoning 3.6 million ETH worth $60 million at the time.
The DAO contracts held 14% of all ether in circulation. The community debated whether to prioritize immutability or fund recovery, with most stakeholders supporting a hard fork to return funds to investors. On July 20, 2016, block 192,000 saw the implementation of the hard fork, which resulted in a permanent split and the creation of Ethereum Classic.
Developers like Vitalik Buterin initially proposed a soft fork to blacklist the attacker, but the threat of bribing miners with 1 million ETH and 100 BTC led to the decision to roll back history and reallocate funds. This change had significant implications for the blockchain's immutability. The SEC later concluded in 2017 that DAO tokens were securities.
Ethereum Classic has maintained a fixed supply of 230 million tokens, prioritizing 'code is law' over the flexibility seen in the main Ethereum network.
The Ethereum network faced another significant event in July 2026 when it reduced block rewards to 1.6384 ETC per block from 2.048. This change occurred at block 25,000,001 and follows a previously announced issuance schedule. The decrease in block rewards has had a major impact on miners using GPUs or older hardware, who struggle to maintain profit margins.
A January 5, 2026, 51 percent attack further highlighted the risks faced by small networks when hash power shifts. The attacker acquired over 50% of the network's hashrate and caused $1.1 million in losses. Coinbase suspended ETC trades to protect users during the reorganization.
The current price of ETC is significantly lower than its 2021 high of $176, sitting near $29.70 before this recent downturn. The dwindling block rewards and hash rate collapse have created a massive gap between computational effort and market value, making hardware efficiency crucial to watch.