Merged Mining: How Dual Mining of Cryptocurrencies Works

Stevan Mcgrath
Jan 11 · 5 min read

Is it possible to mine two coins at a go? Say, for instance, simultaneous Bitcoin and Ethereum mining or some other Altcoins. Just Hang on and you’ll find out soon enough.

Let’s get to it with a quick introduction.

Cryptocurrency Mining — Overview

Crypto mining or digital currency mining involves the verification and addition of diverse forms of crypto transactions to the blockchain ledger. The usage of cryptocurrency has experienced exponential growth over the years with over 32 million BTC wallets at year-end 2018. Likewise, cryptocoin mining has received a whole lot of attention both as a subject of discussion and activity.

coincentral.com- Merged mining pairs Namecoin and Bitcoin

Very Quickly: How does Crypto Mining work?

Crypto transactions are conducted from time to time and every single time a transaction is initiated, a crypto miner is saddled with the responsibility of verifying the authenticity of such a transaction and recording it on the blockchain.

Coin mining itself involves competition among miners, all with a single goal; to solve intricate mathematical problems, and to do it quick. These problems are solved with the aid of cryptographic hash functions associated with blocks containing each transaction data.

What’s in it for a Miner?

Since mining is competitive, it is now down to who cracks the code first. The miner who cracks the code the quickest and able to verify and endorse the transaction is rewarded in return with some amount of cryptocoins. The profitability of mining says, for instance, Bitcoin, is largely dictated by difficulty modifiers and Bitcoin exchange rate. Therefore, the higher the rates, the more profitable it is to mine any coin.

Nowadays, miners are pushing harder to be on top of the game by utilizing specialized computer hardware. So a miner can either choose to crack Bitcoin codes (Bitcoin mining), Ethereum codes (Ethereum Mining) or some other Altcoins (Litecoin, etc.)

Can a Crypto Miner Mine Two Coins Simultaneously?

Dual mining of separate coins is a concept that has received a whole lot of attention in the crypto industry in the past years. More technically, the process of mining more than one cryptocoin is referred to as Merged Mining or Auxiliary POW (Proof-of-Work) a.k.a AuxPOW. It is imperative to note that both coins must have similar algorithms. Also, merged mining utilizes Parent chain and Auxiliary chain concept.

Unlike the traditional Blockchain consensus algorithms — Proof-of-Stake (POS) and Proof-of-Work (POW); AuxPOW is less popular. Merged mining has been implemented on some projects as some sort of ‘piggybank’ or a bootstrap of a much more secure and popular network. The most popular implementations have been the simultaneous mining of Bitcoin and Namecoin in 2011 as well as Dogecoin and Litecoin with the sha-256 algorithm.

The Bitcoin Network is much more secure and popular compared to Namecoin. Hence one would expect Bitcoin to be the Parent chain while Namecoin holds its position as the Auxiliary chain. The Auxiliary or Child chain will accept POW done on the Parent chain, but the reverse is unrealistic. In other words, Namecoin accepts POW from Bitcoin and feeds off the latter’s network.

How Merged Mining Works

At this point, it is important to state that the possibility of a successful merged mining process is largely dependent on the quality of computing hardware available at a miner’s disposal as this dictates the hashrate.

However, existing mining units might require no additional computational power. In mining Bitcoin and Namecoin for instance, is just as efficient as mining Bitcoin alone. A miner or mining pool only needs to put in some codes to enable support for merged mining.

How does this really work?

Bitcoin and Namecoin network will be used as examples. The former being the Parent Chain and the latter, the Auxiliary/Child chain.

First thing is to build a block that will suitably accommodate both Parent and Auxiliary/Child chain. Both chains have varying levels of difficulty, with a Primary chain being the higher of both.

Solving a block at the Primary chain’s difficulty level re-assembles and place the block into both Blockchains since the Child chain accepts AuxPOW. In this manner, it becomes possible to produce a block on both chains simultaneously hence, mining both cryptocurrencies at the same time.

But if a block is solved at the difficulty level of the Child chain, it only adds to the Child’s Blockchain. It becomes impossible to produce a block on both chains hence, only one mining reward is received (Namecoin). This corroborates the earlier statement that Aux/Child chains accept POW from parent chains, but the reverse is not true.

Benefits of Merged Mining

  1. Auxiliary Blockchains become more Secure.

The security of cryptocoins with low hashing power is boosted by their attachment to a parent chain (much larger network).

2. Dilution of power is prevented.

It all seems like merged mining overly benefits Child chain, the parent chain also shares some of the goodies. With merged mining, miners are incited to mine two coins simultaneously. In other words, one network’s hashing power is not diminished at the cost of the other.

Miners are encouraged to channel their resources toward merged mining because they can grow their income without having to do any extra work. Since one can generate more funds mining two coins rather than just one, all miners will eventually merge mine coins, therefore, bringing the difficulty of all Blockchains to the same level in the nearest future.

Final Thoughts

Without mincing words, one could say straightaway that merges mining coins is doable. It is excellent and probably the most secure way to grow younger projects and avoid 51% attacks. Investment wise, implementing merged mining could result in a short-lived price hike for the young project as was experienced in the case of Name coin.

Regardless of the price hike, it is worth knowing that mining two coins at the same time is feasible. And with the ever-increasing threats of attack on less powerful networks, merged mining could rapidly be the preferred frontier.


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Stevan Mcgrath

Written by

Stevan Mcgrath is a cryptocurrency enthusiast. passionate about the potential these tools and blockchain technology bring to the world. #Blockchain #cryptoworld

ALTCOIN MAGAZINE

The best damn place to read and write about crypto and blockchain.