Glossary

Merged mining is simultaneously mining two different cryptocurrencies by using auxiliary proof of work (AuxPoW). It helps miners earn extra coins with the same hashing algorithm without splitting the hash rate.

If you’ve been in the crypto space for a while, then you might know about crypto mining. The common methods used include; CPU mining, GPU mining, ASIC mining, and cloud mining.  A less known way of mining cryptocurrencies is merged mining.

Merged mining also known as auxiliary proof of work (AuxPoW), is the process of mining two separate cryptocurrencies simultaneously. The process allows miners to mine on more than one blockchain at a time.

In the merged mining process, two blockchains are involved, the parent blockchain and the auxiliary blockchain. The parent blockchain is more established (Bitcoin), while the auxiliary blockchain is new or small (Namecoin).

For the blockchains to work together, they must share the same hashing algorithm. This means all involved cryptocurrencies must be using the same algorithm.

For example, Bitcoin uses SHA-256, meaning any other coin that uses SHA-256 can be mined with Bitcoin. One of the popular merged mining pairs is Namecoin and Bitcoin, which both use the SHA-256 hashing algorithm for mining.

We will use Bitcoin and Namecoin as examples.  Bitcoin will be the parent blockchain, while Namecoin will be the auxiliary blockchain.

The first step is to build a block of transactions for each chain. The next step is to start mining. Note that both chains will have varying levels of difficulty, with the primary chain being the higher of both. As you mine, three different scenarios could play out.

Merged mining does not need additional computing power from the miners, which is one of its greatest advantages. 

There are a few advantages that come with merged mining.

Some of the disadvantages that come with merged mining include:

Overall, merged mining has its advantages, from helping young blockchain projects grow to enhanced security for the networks. While many dispute the capabilities of this crypto mining method, many crypto projects continue to implement it, and its popularity continues to grow.

Merged Mining

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