Update rank on a large table

Rhetorical Question: Do you really need to rank all 12,000,000 records?

At my employer's web hosting company, we have a gaming client that ranks its top 10,000 players per game platform. They use the same construct you do. You should just limit it to the top 10,000 or whatever number is reasonable

SET @r=0;
UPDATE records SET rank= @r:= (@r+1) where type = 2 ORDER BY seconds DESC LIMIT 10000;

I would run your original query at midnight to get them all

If you must try to rank all, maybe you can try something like this:

DROP TABLE IF EXISTS ranktable;
CREATE TABLE ranktable
(
    rank INT NOT NULL AUTO_INCREMENT,
    rec_id INT NOT NULL,
    PRIMARY KEY (rank)
);
INSERT INTO ranktable (rec_id)
SELECT rec_id FROM records WHERE type=2 ORDER BY seconds DESC;
UPDATE records A INNER JOIN ranktable B USING (rec_id) SET A.rank = B.rank;

What may further help is to index your records table like this:

ALTER TABLE records ADD INDEX type_seconds_ndx (type,seconds);