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ViaBTC | Why Do I Receive Less Mining Profits Than Others? A Beginner’s Introduction to Mining Together

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There are two definitions of mining together. The first is pool mining, i.e. cooperation with mining companies. As mining difficulty continues to increase, both the mining threshold and mining machine prices are growing higher. When potential miners cannot afford a mining machine, they could choose to mine together with a well-established mining company.

The second type of mining together is known as merged mining, i.e. linking one or more low-yield tokens to a high-yield token for mining through the same hashing power. Common merged mining includes LTC+DOGE, BCH+SYS, etc

Today, we will focus on merged mining.

Merged mining was first applied to BTC. As early as 2011, NMC incentives were offered for mining BTC. Currently, in addition to NMC, numerous tokens are linked to BTC, covering SYS, EMC, and ELA, to just name the most common ones.

According to data from CoinMarketCap, in terms of market cap, none of these low-yield tokens are included in the top 300. SYS, the highest valued token among them, ranked 315th. Only tokens with poor liquidity and a low turnover rate are willing to link themselves to high-yield tokens, exceptDOGE, which unexpectedly surged thanks to Elon Musk.

To get linked with mainstream tokens is also quite demanding. To begin with, the two tokens must share the same algorithm. In addition, the community also needs to vote on whether to link with a high-yield token. For example, though DOGE and LTC are both based on the Scrypt algorithm, the former’s hashing power was only 1/15 of the latter. Proposed by LTC’s founder Charles Lee, the merged mining of LTC+ DOGE was eventually passed by the DOGE community after heated debates.

What makes merged mining possible? Simply put, in merged mining, the high-yield token acts as the parent chain, while the low-yield token serves as an auxiliary chain. For instance, in the case of LTC+ DOGE, the former is the parent chain, and the latter is an auxiliary chain. Using the Auxiliary Proof of Work, the auxiliary chain is able to validate its blocks using hashing power from the parent chain without affecting its normal operation.

Right now, almost all leading pools have launched merged mining. For example, ViaBTC now supports the merged mining of BTC, BCH, and LTC with the below ratios:

In addition to boosting the hashing power of less-established tokens, merged mining also makes these tokens more credible. Through merged mining, the tokens quickly become more active and well-known. For low-yield tokens, merged mining makes 51% attacks more expensive, which ensures on-chain security to a certain extent. Of course, to engage in merged mining, community voting is indispensable. Moreover, technical upgrades are also needed once merged mining is approved.

For miners, merged mining brings extra earnings while the hash rate stays the same. To date (September 1), the prices of NMC, ELA, and DOGE are $1.41, $3.17, and $0.27, respectively. Over the long run, small earnings from these tokens could add up to a big extra income for miners.

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