Explaining Merged Mining

Hathor Labs
Apr 7 · 5 min read
Medium cover image: Explaining Merged Mining on Hathor Network. Shows some blocks and a pick
All you need to know about merged mining and Hathor Network

You may have heard that Hathor Network supports merged mining with Bitcoin. Why is this important, and how do you get started with merged mining?

Let’s take a closer look.

Quick background

The concept of merged mining isn’t new. It’s actually almost as old as Bitcoin itself. In a Bitcoin forum thread from 2010, Satoshi Nakamoto talked about the possibility of miners searching for Proof of Work (PoW) for two networks simultaneously, and the idea quickly caught the attention of other developers.

The first implementation of merged mining occurred on the Namecoin blockchain in 2011 when the network added support for Bitcoin’s SHA-256 algorithm. In addition to Hathor Network, Elastos and RSK are other examples of blockchains that support merged mining with Bitcoin.

If we look at Scrypt-based blockchains, Dogecoin is the most famous network to have adopted merged mining, with most of its hash power coming from large Litecoin mining pools.

There are also some multi-merge-mined blockchains. These are networks that support multiple PoW algorithms, aiming to provide resistance against mining centralization. One such network is Myriad, which supports five different algorithms.

What exactly is merged mining?

Merged mining is essentially a mechanism that enables mining more than one cryptocurrency without requiring additional PoW effort.

It lets miners use their computational power to mine blocks on multiple chains at the same time through Auxiliary Proof of Work (AuxPoW). AuxPoW means that the work done on one blockchain, known as the parent chain, can be accepted as valid work on another chain called the auxiliary or child chain.

The parent and child chain will often have different difficulty requirements for solving the PoW. This means that there can be three different outcomes when miners find a solution to the cryptographic puzzle; it can either (i) meet the requirements of both chains, (ii) one of the chains, or (iii) none of them. And as more blocks get mined in a short period of time, the PoW difficulty increases, and more work is needed to find the next block — in other words, the more difficult the process becomes.

Pros and cons of merged mining

For miners, an obvious advantage of merged mining is significantly reduced investment costs as they don’t have to buy any extra hardware, or modify their existing equipment, to mine the additional cryptocurrency. At the same time, they earn extra rewards by maintaining an additional chain, so it’s a win-win for them.

The child chains are also winners in this. Take Hathor Network, which uses SHA-256, the same algorithm as Bitcoin, Bitcoin Cash, Bitcoin SV, and others. In our case, Bitcoin is the parent blockchain, while Hathor is the child chain accepting the AuxPoW.

By supporting merged mining, Hathor Network gains significant additional hashing power by plugging into Bitcoin’s existing infrastructure and miner network.

This has made it possible for Hathor Network to reach an impressive hashrate, often passing exahash levels, in record time. This again has made attacks against the network costly and less attractive. Transaction numbers and hashrate are expected to increase as some much-awaited products go live on Hathor later this year, further improving the network‘s security. There’s no doubt that for Hathor, merged mining has proven to be a great way to bootstrap the young network.

And let’s not forget the environmental aspect of merged mining. Although the discussion on sustainable cryptocurrency mining is a complex and multifaceted one, with strong opinions on both sides, merged mining at least doesn’t add to the industry’s carbon footprint.

Making it easier for the mining community to pour hash power into Hathor Network can, however, be a somewhat double-edged sword. While merged mining aims to help protect the network, at the same time, it adds a potential risk.

Larger players could attempt to control over 50 percent of the network’s mining hash rate without having to dedicate hash power exclusively to do so. This means that ill-intentioned miners could try to interrupt Hathor Network while still mining Bitcoin. By doing this they wouldn’t be risking any financial losses in the parent chain — Bitcoin in our case — however, they would risk losses in the auxiliary chain, Hathor.

This principle is the same for any PoW chain though, merge mined or not, where you are dependent on the support of at least 51 percent of the hashpower. The only difference with merged mining is that you don’t risk losses on the parent chain.

However, it is important to note that Hathor Network has seen no signs of dishonest or intentional malicious behavior from any miners on the network.

Hathor Network also believes that the benefits of merged mining, together with direct partnerships with miners, outweigh and mitigate the potential risk.

It’s also worth mentioning that Hathor Network considered changing the mining rewards for AuxPoW blocks to balance the incentive of doing merged versus direct mining. The conclusion was that this would add unwanted complexity and distract from the network´s original intention, which was to increase hashrate and security.

This is why mining rewards on Hathor Network are the same for both direct and merged mined blocks.

Infographic explaining how Merged Mining works: SHA256 miners (such as Bitcoin, Bitcoin Cash, Bitcoin SV, etc…) can secure blocks on separate chains and claim rewards on both
How Merged Mining works on Hathor Network

How to do merged mining on Hathor Network

Before you start mining Hathor Network or any other cryptocurrency, you should calculate your potential earnings. Your profitability will depend on various factors such as your electricity costs and existing mining hardware, as well as current hashrate and any pool fees if you’re joining a mining pool. You can use the minerstat or MiningPoolStats websites to calculate your estimated earnings.

Please note that you will need an ASIC to mine HTR.
CPU or GPU mining isn’t profitable.

To get started with merged mining on Hathor Network, please follow the instructions in this guide. If you want to read the full technical specification, check out the Merged Mining RFC.

If you need any assistance with the setup or want to talk to other miners or a Hathor Network developer, please join the Hathor Network Discord which has a dedicated channel for mining.

This article was written by Trond Bjorøy.

About Hathor Network

Hathor Network is a PoW-based novel distributed ledger architecture using both DAG and blockchain data structures intertwined. Our network’s unique design solves significant bottlenecks built with scalability, usability, and decentralization in mind, preventing the broad adoption of the technology.

Hathor Network has been on mainnet since January 2020, experiencing exponential growth in the number of custom tokens, active wallets, and mining hash rate.

For more information, please visit our Website, Twitter, Discord, and Telegram channel.

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