Litecoin miners could do "merged mining" with Dogecoin to boost returns

20 Jul, 2019
by David Borman
Mining
Litecoin miners could do merged mining with Dogecoin to boost returns

It has been reported by Use The Bitcoin that it is possible, depending on market performance, that Dogecoin's mining reward could outweight Litecoin's by 2040. However, Litecoin miners can boost their profitability by using "merge mining" to simultaneously mine both coins.

The article refernces a Binance Research report that analyzed the state of affairs with both chains and explored the idea that merge mining could keep both coins relevant into the future. From the report:

"For instance, let’s assume prices to be constant with Dogecoin being equal to USD0.0035 and Litecoin being equal to USD121. At current prices in USD terms, Dogecoin’s mining rewards would outweigh Litecoin’s mining rewards by around 2039-2040."

Since Dogecoin is a fork of Litecoin, both use the Scrypt hashing function. This means miners can potentially use a "merged mining" technique which mines coins on both chains simultaneously. All of this is made possible with a process called Auxiliary Proof of Work (AuxPoW). From the Binance Report:

"Merged mining refers to the act of mining two or more cryptocurrencies at the same time, without sacrificing overall mining performance. Essentially, a miner can use their computational power to mine blocks on multiple chains concurrently through the use of what is known as Auxiliary Proof of Work (AuxPoW)."

It is noted that Litecoin and Dogecoin have shared a very high correlation between their hashrates for all of their existence, as high as 95%:

The report goes into greater detail on all of these points, but it sounds like a lucrative opportunity for both Litecoin and Dogecoin miners alike. Will merged mining catch on, and even spread to other compatible coins? Stick with Chepicap for all updates!

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