Hello,
I am using Archlinux current with:
- kernel 5.10.27-1-lts
- virt-builder 1.42.0
- QEMU emulator version 5.2.0

Everything was working fine like 3 days ago. As you can see last time I updated my kernel:
[2021-03-31T09:10:53+0200] [ALPM] upgraded linux-lts (5.10.26-1 -> 5.10.27-1)

When I am trying to build ubuntu 18.04 image with virt-builder I am getting the following error now (with export LIBGUESTFS_DEBUG=1 LIBGUESTFS_TRACE=1):
[   1.3] Downloading: http://builder.libguestfs.org/ubuntu-18.04.xz
libguestfs: trace: set_verbose true
libguestfs: trace: set_verbose = 0
libguestfs: create: flags = 0, handle = 0x563eb1046ad0, program = virt-builder
libguestfs: trace: get_cachedir
libguestfs: trace: get_cachedir = "/var/tmp"
[   1.8] Planning how to build this image
[   1.8] Uncompressing
[  10.4] Resizing (using virt-resize) to expand the disk to 64.0G
libguestfs: trace: set_verbose true
libguestfs: trace: set_verbose = 0
libguestfs: create: flags = 0, handle = 0x563eb1015550, program = virt-builder
libguestfs: trace: disk_create "k8smaster1.qcow2" "qcow2" 68719476736 "preallocation:metadata"
libguestfs: command: run: qemu-img
libguestfs: command: run: \ create
libguestfs: command: run: \ -f qcow2
libguestfs: command: run: \ -o preallocation=metadata
libguestfs: command: run: \ ./k8smaster1.qcow2
libguestfs: command: run: \ 68719476736
Formatting './k8smaster1.qcow2', fmt=qcow2 cluster_size=65536 extended_l2=off preallocation=metadata compression_type=zlib size=68719476736 lazy_refcounts=off refcount_bits=16
libguestfs: trace: disk_create = 0
libguestfs: trace: set_verbose true
libguestfs: trace: set_verbose = 0
libguestfs: create: flags = 0, handle = 0x558510868410, program = virt-resize
libguestfs: trace: add_drive "/var/tmp/vb99ac3c.img" "readonly:true" "format:raw" "protocol:file"
libguestfs: creating COW overlay to protect original drive content
libguestfs: trace: get_tmpdir
libguestfs: trace: get_tmpdir = "/tmp"
libguestfs: trace: disk_create "/tmp/libguestfsfW3FUV/overlay1.qcow2" "qcow2" -1 "backingfile:/var/tmp/vb99ac3c.img" "backingformat:raw"
libguestfs: command: run: qemu-img
libguestfs: command: run: \ create
libguestfs: command: run: \ -f qcow2
libguestfs: command: run: \ -o backing_file=/var/tmp/vb99ac3c.img,backing_fmt=raw
libguestfs: command: run: \ /tmp/libguestfsfW3FUV/overlay1.qcow2
Formatting '/tmp/libguestfsfW3FUV/overlay1.qcow2', fmt=qcow2 cluster_size=65536 extended_l2=off compression_type=zlib size=6442450944 backing_file=/var/tmp/vb99ac3c.img backing_fmt=raw lazy_refcounts=off refcount_bits=16
libguestfs: trace: disk_create = 0
libguestfs: trace: add_drive = 0
libguestfs: trace: add_drive "k8smaster1.qcow2" "readonly:false" "format:qcow2" "protocol:file" "cachemode:unsafe"
libguestfs: trace: add_drive = 0
libguestfs: trace: launch
libguestfs: trace: max_disks
libguestfs: trace: max_disks = 255
libguestfs: trace: version
libguestfs: trace: version = <struct guestfs_version = major: 1, minor: 42, release: 0, extra: , >
libguestfs: trace: get_backend
libguestfs: trace: get_backend = "direct"
libguestfs: launch: program=virt-resize
libguestfs: launch: version=1.42.0
libguestfs: launch: backend registered: unix
libguestfs: launch: backend registered: uml
libguestfs: launch: backend registered: libvirt
libguestfs: launch: backend registered: direct
libguestfs: launch: backend=direct
libguestfs: launch: tmpdir=/tmp/libguestfsfW3FUV
libguestfs: launch: umask=0022
libguestfs: launch: euid=0
libguestfs: trace: get_cachedir
libguestfs: trace: get_cachedir = "/var/tmp"
libguestfs: begin building supermin appliance
libguestfs: run supermin
libguestfs: command: run: /usr/bin/supermin
libguestfs: command: run: \ --build
libguestfs: command: run: \ --verbose
libguestfs: command: run: \ --if-newer
libguestfs: command: run: \ --lock /var/tmp/.guestfs-0/lock
libguestfs: command: run: \ --copy-kernel
libguestfs: command: run: \ -f ext2
libguestfs: command: run: \ --host-cpu x86_64
libguestfs: command: run: \ /usr/lib/guestfs/supermin.d
libguestfs: command: run: \ -o /var/tmp/.guestfs-0/appliance.d
supermin: version: 5.2.0
supermin: package handler: arch/pacman
supermin: acquiring lock on /var/tmp/.guestfs-0/lock
supermin: if-newer: output does not need rebuilding
libguestfs: finished building supermin appliance
libguestfs: begin testing qemu features
libguestfs: trace: get_cachedir
libguestfs: trace: get_cachedir = "/var/tmp"
libguestfs: checking for previously cached test results of /usr/bin/qemu-system-x86_64, in /var/tmp/.guestfs-0
libguestfs: loading previously cached test results
libguestfs: qemu version: 5.2
libguestfs: qemu mandatory locking: yes
libguestfs: qemu KVM: enabled
libguestfs: trace: get_backend_setting "force_tcg"
libguestfs: trace: get_backend_setting = NULL (error)
libguestfs: trace: get_sockdir
libguestfs: trace: get_sockdir = "/tmp"
libguestfs: finished testing qemu features
libguestfs: trace: get_backend_setting "gdb"
libguestfs: trace: get_backend_setting = NULL (error)
libguestfs: command: run: file
libguestfs: command: run: \ -- /var/tmp/.guestfs-0/appliance.d/root
/usr/bin/qemu-system-x86_64 \
    -global virtio-blk-pci.scsi=off \
    -no-user-config \
    -enable-fips \
    -nodefaults \
    -display none \
    -machine accel=kvm:tcg \
    -cpu host \
    -m 768 \
    -no-reboot \
    -rtc driftfix=slew \
    -no-hpet \
    -global kvm-pit.lost_tick_policy=discard \
    -kernel /var/tmp/.guestfs-0/appliance.d/kernel \
    -initrd /var/tmp/.guestfs-0/appliance.d/initrd \
    -object rng-random,filename=/dev/urandom,id=rng0 \
    -device virtio-rng-pci,rng=rng0 \
    -device virtio-scsi-pci,id=scsi \
    -drive file.file.filename=/tmp/libguestfsfW3FUV/overlay1.qcow2,file.driver=qcow2,file.backing.file.locking=off,cache=unsafe,id=hd0,if=none \
    -device scsi-hd,drive=hd0 \
    -drive file=/tmp/k8smaster1.qcow2,cache=unsafe,format=qcow2,id=hd1,if=none \
    -device scsi-hd,drive=hd1 \
    -drive file=/var/tmp/.guestfs-0/appliance.d/root,snapshot=on,id=appliance,cache=unsafe,if=none,format=raw \
    -device scsi-hd,drive=appliance \
    -device virtio-serial-pci \
    -serial stdio \
    -device sga \
    -chardev socket,path=/tmp/libguestfsxcJzEf/guestfsd.sock,id=channel0 \
    -device virtserialport,chardev=channel0,name=org.libguestfs.channel.0 \
    -append "panic=1 console=ttyS0 edd=off udevtimeout=6000 udev.event-timeout=6000 no_timer_check printk.time=1 cgroup_disable=memory usbcore.nousb cryptomgr.notests tsc=reliable 8250.nr_uarts=1 root=UUID=852582a6-3f81-41e9-ffffa900-b62fa2d50325 selinux=0 guestfs_verbose=1 TERM=xterm-256color"
WARNING: Image format was not specified for '/tmp/libguestfsfW3FUV/overlay1.qcow2' and probing guessed raw.
         Automatically detecting the format is dangerous for raw images, write operations on block 0 will be restricted.
         Specify the 'raw' format explicitly to remove the restrictions.
libguestfs: responding to serial console Device Status Report
\x1b[1;256r\x1b[256;256H\x1b[6n
Google, Inc.
Serial Graphics Adapter 04/27/17
SGABIOS $Id$ (pbonzini@donizetti) gio 27 apr 2017, 08.36.57, UTC
Term: 80x24
4 0
SeaBIOS (version ArchLinux 1.14.0-1)
Booting from ROM...
\x1b[2J[    0.094817] usbserial: usb_serial_init - registering generic driver failed
[    0.095591] usbserial: usb_serial_init - returning with error -19
supermin: mounting /proc
supermin: ext2 mini initrd starting up: 5.2.0 glibc
supermin: cmdline: panic=1 console=ttyS0 edd=off udevtimeout=6000 udev.event-timeout=6000 no_timer_check printk.time=1 cgroup_disable=memory usbcore.nousb cryptomgr.notests tsc=reliable 8250.nr_uarts=1 root=UUID=852582a6-3f81-41e9-ffffa900-b62fa2d50325 selinux=0 guestfs_verbose=1 TERM=xterm-256color
supermin: uptime: 0.15 0.02
supermin: mounting /sys
supermin: internal insmod crc32-pclmul.ko
supermin: internal insmod crc32c-intel.ko
supermin: internal insmod crct10dif-pclmul.ko
supermin: internal insmod crc32_generic.ko
supermin: internal insmod crc32c_generic.ko
supermin: internal insmod nfit.ko
supermin: internal insmod ata_piix.ko
^H^H^Hsupermin: internal insmod virtio_blk.ko
supermin: internal insmod rng-core.ko
supermin: internal insmod virtio-rng.ko
supermin: internal insmod virtio_console.ko
supermin: internal insmod crypto_engine.ko
supermin: internal insmod virtio_crypto.ko
supermin: internal insmod failover.ko
supermin: internal insmod net_failover.ko
supermin: internal insmod virtio_net.ko
supermin: internal insmod nd_btt.ko
supermin: internal insmod nd_pmem.ko
supermin: internal insmod nd_virtio.ko
supermin: internal insmod virtio_pmem.ko
supermin: internal insmod rpmsg_core.ko
supermin: internal insmod virtio_rpmsg_bus.ko
supermin: internal insmod virtio_scsi.ko
supermin: internal insmod virtio_balloon.ko
supermin: internal insmod virtio_dma_buf.ko
supermin: internal insmod virtio_input.ko
supermin: internal insmod virtio_mem.ko
supermin: internal insmod virtio_mmio.ko
supermin: internal insmod virtio_pci.ko
supermin: internal insmod vdpa.ko
supermin: internal insmod virtio_vdpa.ko
supermin: internal insmod jbd2.ko
supermin: internal insmod mbcache.ko
supermin: internal insmod crc16.ko
supermin: internal insmod ext4.ko
supermin: internal insmod fuse.ko
supermin: internal insmod virtiofs.ko
supermin: internal insmod crc-itu-t.ko
supermin: internal insmod crc4.ko
supermin: internal insmod crc64.ko
supermin: internal insmod crc7.ko
supermin: internal insmod crc8.ko
supermin: internal insmod libcrc32c.ko
supermin: root UUID is longer than 16 bytes
[    0.555625] Kernel panic - not syncing: Attempted to kill init! exitcode=0x00000100
[    0.556423] CPU: 0 PID: 1 Comm: init Not tainted 5.10.27-1-lts #1
[    0.557065] Hardware name: QEMU Standard PC (i440FX + PIIX, 1996), BIOS ArchLinux 1.14.0-1 04/01/2014
[    0.558070] Call Trace:
[    0.558339]  dump_stack+0x6b/0x83
[    0.558694]  panic+0x10b/0x2e1
[    0.559023]  do_exit.cold+0x57/0xb3
[    0.559396]  ? vfs_write+0x153/0x280
[    0.559781]  do_group_exit+0x33/0xa0
[    0.560165]  __x64_sys_exit_group+0x14/0x20
[    0.560608]  do_syscall_64+0x33/0x40
[    0.560988]  entry_SYSCALL_64_after_hwframe+0x44/0xa9
[    0.561520] RIP: 0033:0x441221
[    0.561845] Code: c0 ff ff ff be e7 00 00 00 ba 3c 00 00 00 eb 16 66 0f 1f 84 00 00 00 00 00 89 d0 0f 05 48 3d 00 f0 ff ff 77 1c f4 89 f0 0f 05 <48> 3d 00 f0 ff ff 76 e7 f7 d8 64 41 89 00 eb df 0f 1f 80 00 00 00
[    0.563775] RSP: 002b:00007ffd98dcca78 EFLAGS: 00000246 ORIG_RAX: 00000000000000e7
[    0.564576] RAX: ffffffffffffffda RBX: 00000000004b3230 RCX: 0000000000441221
[    0.565319] RDX: 000000000000003c RSI: 00000000000000e7 RDI: 0000000000000001
[    0.566053] RBP: 0000000000000001 R08: ffffffffffffffc0 R09: 0000000000000000
[    0.566785] R10: 0000000000441fb7 R11: 0000000000000246 R12: 00000000004b3230
[    0.567547] R13: 0000000000000001 R14: 0000000000000000 R15: 0000000000000001
[    0.568320] Kernel Offset: 0xec00000 from 0xffffffff81000000 (relocation range: 0xffffffff80000000-0xffffffffbfffffff)
[    0.569419] Rebooting in 1 seconds..
libguestfs: child_cleanup: 0x558510868410: child process died
libguestfs: sending SIGTERM to process 11801
libguestfs: qemu maxrss 175888K
libguestfs: trace: launch = -1 (error)
virt-resize: error: libguestfs error: guestfs_launch failed, see earlier
error messages

If reporting bugs, run virt-resize with debugging enabled and include the
complete output:

  virt-resize -v -x [...]
libguestfs: trace: close
libguestfs: closing guestfs handle 0x558510868410 (state 0)
libguestfs: command: run: rm
libguestfs: command: run: \ -rf /tmp/libguestfsfW3FUV
libguestfs: command: run: rm
libguestfs: command: run: \ -rf /tmp/libguestfsxcJzEf
libguestfs: trace: close
libguestfs: closing guestfs handle 0x563eb1015550 (state 0)
libguestfs: trace: close
libguestfs: closing guestfs handle 0x563eb1046ad0 (state 0)

Let me know what you think