I have several bags of granulated sugar that was stored too long in my basement larder. It has become rock hard in its bag.

Have you tried zapping in the microwave at 20 second intervals to see it you can soften it? I usually try that with any sugar and it seems to work. So go chisel out a chunk and give a few light zaps.

ChefOno, thank you for this information. This is good to know.

Maybe my comments would make more sense with the science explained:

Anytime you cook down a syrup, what you're really doing is adjusting its water content. In the context of candy making, the longer you boil the syrup, the less water it will contain, the higher the temperature at which it boils, and the harder / more brittle the finished product will be. Conversely, if you overcook a syrup, you can simply add more water to take it back from, say, hard crack stage back to soft ball.

Note that sugar won't caramelize until all the water has boiled off.

Thanks all. I am going to make some simple syrup and try to find a recipe by weight for caramel or even toffee might work. Some way I am going to make this work so I don't have to throw away 10 pounds of sugar. Again, thanks all for your suggestions.

Unless you're desperate and living miles from the nearest store, I say stop the flailing about with hammers and power tools and simply make syrup. Me, I'd use it up soon enough in my evening cocktail but there's absolutely no reason why you can't caramelize it. The water will simply boil away without harm. The same holds true for other, non-caramelized, candies.

I should have also answered your question about using it in a recipe that calls for sugar by weight and where it will be dissolved in liquid or heated to make caramel sauce; I'm sure you can use it for the former, not sure about the latter. Perhaps try a chunk you've broken off and see?

Can you break it up into smaller pieces with the hammer, and then try whacking/rolling the smaller pieces individually in a clean tea towel or a Ziplock bag with a rolling pin until you get it broken down? This sounds like something great for kids or grandkids to do, doesn't it? I'm sure you can salvage it; it's just going to take some elbow grease, I'm afraid.

I just tried it in the food processor and it stopped the blade from spinning because it is too hard.

Cover the whole thing in a heavy duty plastic zip loc, cover with a kitchen towel & Give it 40 whacks with a hammer.. and if it is still not pulvervirized and done, give it another 41! then add it to the food processor.
ALternatively place it in a muslin bag, & place the bag over steam to soften

Sarah, thank you. I am reluctant to run it in the food processor because the sugar is so hard. Couldn't this harm my blade?

Try breaking it up in a food processor, should be good to use after that.