What Is Merged Mining?
Merged mining is a solution for miners who want to mine two or more coins using the same computational power. Mining is characteristic of Proof of Work blockchains, where network participants solve complex mathematical puzzles to validate transactions and add them to the blockchain.
Merged mining is also called Auxiliary Proof of Work as it involves a primary blockchain, where the main process and resources are concentrated, and a secondary blockchain which is supported by the computational proof generated on the primary chain. For merged mining to be technically feasible, both blockchains must use the same cryptographic hash function, which converts data into a fixed string of characters called a hash. The mining process requires solving computational puzzles to find a specific hash that proves a miner has invested resources in the process. When a miner finds the right hash, they get a reward.
PoW blockchains have different mining difficulties, depending on the hash rate, or computing power, needed to mine new blocks.
How hashing works: Source: Bitcoin Talk
In the case of merged mining, a miner aims to find a hash that is valid for both chains to create new blocks and earn rewards from each. The merged mining setup usually includes Bitcoin as the primary chain and other blockchains using the same hashing algorithm such as Namecoin or Bitcoin Cash.
One of the earliest discussions around merged mining was started by Bitcoin creator Satoshi Nakamoto in the Bitcoin Forum in 2010. Satoshi suggested that mining hardware power could be shared between Bitcoin and other chains. This mechanism was intended to be implemented in BitDNS, a platform for domain name services based on Bitcoin’s technology. BitDNS was later renamed Namecoin and has been operating as a separate chain with its native coin, NMC, which can be merged and mined in parallel with Bitcoin.
How to Merge Mine Crypto?
Merged mining is supported by several crypto-mining platforms, including Antpool, F2Pool, and ViaBTC. To start parallel mining, a miner first needs to choose which cryptocurrencies they want to mine, selecting from options such as Bitcoin (BTC), Litecoin (LTC), Dogecoin (DOGE), Namecoin (NMC), Elastos (ELA), Syscoin (SYS), Terracoin (TRC), and others. After making this decision, the miner should find a platform that supports these cryptocurrencies and create an account by connecting their mining hardware. Typically, merged mining coins can be added through the platform’s settings, where the user enters their payout addresses.
Besides mining platforms, merged mining is also possible through specialized solutions, among which is Rootstock. Launched in 2018, Rootstock is a smart contract platform that empowers complex Bitcoin transactions.
Rootstock has a native RBTC coin, which is pegged 1:1 with Bitcoin. Due to the platform's merged mining capability miners can earn rewards in BTC and RBTC using the same computational power. To start mining with Rootstock, miners need to download and set up the pool software.
Things to Consider If You’re Planning to Merge Mine Crypto
Merged mining can be a good way to stay profitable when mining cryptocurrencies. For Bitcoin mining, in particular, miners may face profitability issues due to the upfront investment in hardware, energy costs, and mining difficulty. Another point to consider is that Bitcoin halving events cut miners' block rewards in half around every 4 years. The last Bitcoin halving happened on April 20, 2024, making the mining reward from 6.25 BTC to 3.125 BTC per block.
Merged mining allows Bitcoin miners to receive rewards in other cryptos as well without adding extra computational resources. It’s important to note however that while merged mining doesn’t require additional hardware, it may need extra disk space, memory, and processing power.
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