Merged Mining – an Introduction

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  • Merged mining is a much overlooked method of mining cryptocurrencies
  • The concept is behind a number of projects, including the much hyped Hathor
  • What is merged mining and why isn’t it more popular?

Merged mining has been around since 2017 but is something that few people are aware of, despite its advantages. With newer projects like the much talked about Hathor (HTR) adopting it, we take a look at the concept and see what it’s all about.

What is Merged Mining?

Merged mining is the act of mining two cryptocurrencies at the same time without the hashrate, or mining power, being compromised. It only works with Proof-of-Work blockchains and can provide a secondary income for miners while increasing the security of smaller blockchain.

How Does Merged Mining Work?

Merged mining utilizes the Auxiliary Proof of Work (AuxPoW) algorithm to allow a miner to use their computational power to mine blocks concurrently on multiple chains. The concept behind merged mining is that the work done on one blockchain (e.g. Bitcoin mining) can be used as leverage for another blockchain. The providing blockchain (e.g. Bitcoin) is called the ‘parent’ blockchain while the receiving blockchain is called the ‘child’.

Which Coins Allow Merged Mining?

Virtually any two cryptocurrencies can be mined together with merge mining, providing they use the same mining algorithm. For example, Bitcoin uses SHA-256 encryption, meaning that virtually any other coin that also uses SHA-256 can be mined alongside Bitcoin, providing the technical considerations are met.

What Are the Advantages of Merged Mining?

The main advantage to merged mining is security. As the child chain piggybacks off the parent chain it also enjoys the same level of security, allowing smaller coins to have the same level of protection and 51% attack resistance as Bitcoin.

Merged mining also allows the possibility of earning mining rewards on two blockchains at once, a potentially valuable sideline, and allows you more bang for your buck as far as mining equipment goes.

What are the Disadvantages of Merged Mining?

Given that merged mining requires the same mining algorithms to be used, this limits the scope of coin pairings than can be mined. There are also concerns that it is not as secure as first thought, with the potential for a large mining pool to carry out a 51% attack on the child chain.

Merged Mining Will Remain a Niche Method

Merged mining has been around for around four years, but it remains a little known concept, despite its overwhelming advantages to smaller projects. However, with Proof-of-Work slowly becoming an outdated consensus mechanism, there is less chance of newer projects adopting it in favor of the likes of Proof-of-Stake and DAG.