What is merge mining and how does it work?

What is merged mining?

Merge mining is the process of simultaneously mining multiple PoW-based cryptocurrencies that share the same hash algorithm using the same mining hardware. Miners can therefore earn significant mining rewards by contributing their computing power to multiple blockchains simultaneously.

Satoshi Nakamoto, the anonymous creator of Bitcoin, proposed merged mining technology in 2010. This allowed miners to mine another cryptocurrency alongside its base or parent blockchain, Bitcoin. In merge mining, other blockchains that work together with the parent blockchain are called secondary blockchains.

The only condition for merge mining is that other cryptocurrencies must follow the same mining algorithm as Bitcoin, SHA-256.

How does merge mining work?

Merge mining means mining multiple cryptocurrencies simultaneously without compromising mining performance. The basic technique of merge mining is the use of auxiliary proof-of-work (AuxPoW). For example, AuxPoW leverages operations performed on one blockchain as valid operations on another blockchain.

Simply put, the primary blockchain that provides proof of work is called the parent blockchain, and the blockchain that accepts work as valid is called the secondary blockchain.

However, a prerequisite for merged mining is that all cryptocurrencies involved must follow the same algorithm. For example, if you want to mine a cryptocurrency alongside Bitcoin, that cryptocurrency must also follow Bitcoin’s SHA-256 algorithm.

The parent and secondary blockchains work together to mine your preferred cryptocurrency. However, while the parent blockchain does not undergo many modifications, the secondary blockchain must be optimized to accommodate the operations of the primary or parent blockchain.

The question of whether merged mining is good or bad is still debated. Some argue that merged mining enhances blockchain security and reduces the likelihood of blockchain attacks. However, others say merged mining does not actually strengthen blockchain security.

What you need for merge mining

Therefore, I would like to mine multiple cryptocurrencies simultaneously by participating in merged mining. What is needed for successful merged mining? Let’s discuss.

First, you need a suitable Application-Specific Integrated Circuit (ASIC) miner that is precisely programmed for the underlying cryptocurrency blockchain you wish to mine. For example, if you prefer Bitcoin and other related cryptocurrencies, you will need an ASIC miner optimized for the SHA-256 algorithm.

The mining pool you work with must support merged mining and your preferred cryptocurrency. For example, it must be a mining pool with a merged mining service. So, if Bitcoin is the primary blockchain, you can mine any related cryptocurrency that follows the SHA-256 algorithm, such as Bitcoin SV, Bitcoin Cash, etc.

• Support Secondary Blockchain

If you need to mine multiple cryptocurrencies, you will need a secondary blockchain that supports the merge mining process. To be precise, merged mining requires AuxPoW support. All blockchains that share the same hashing algorithm do not support AuxPoW, so you will need to double-check this before starting merge mining.

Advantages and disadvantages of merged mining

Let’s take a look at the potential advantages and disadvantages of merged mining.

1. Increased efficiency

Miners can mine multiple cryptocurrencies simultaneously on both primary and secondary blockchains.

2. Enhanced mining rewards

Miners can earn rewards on both primary and secondary blockchain networks, allowing them to earn more mining profits.

1. Complex design

Merged mining setups can be complex and technically challenging. Miners need technical expertise to successfully implement merged mining techniques. It also requires more work than mining a single blockchain.

2. Reliance on parent blockchain

The security of the secondary chain relies on the hash power of the parent blockchain.

Merge Mining Example

Merge mining algorithms mainly centered around SHA-256 and Scrypt. However, most mining pools do not provide merge mining services. Therefore, miners should thoroughly research a pool’s merged mining service and the cryptocurrencies it offers.

Some of the notable merged mining are Bitcoin and Namecoin. You can also mine Litecoin and Dogecoin together. However, merged mining is complex in design and requires technical expertise.