In line with a recent ‘report‘ published by Binance Research, the affect of block ‘reward halvings’ for both the renowned cryptocurrencies Bitcoin [BTC] & Litecoin [LTC] mining might be reduced by merged mining.
Following Charlie Lee’s ‘prediction‘ that several of miners might terminate their Litecoin mining after the halving, that is ‘predicted‘ to take place later on 5th Aug., this year, Binance Research analyzed the potentials of merged mining to retain some incentives for crypto miners.
In Merged mining, the work done is one ‘blockchain‘, or parent blockchain, on other smaller child blockchains by employing Auxiliary PoW [AuxPoW]. Till date, there are 3 major examples of merged mining, along with Bitcoin blockchain-parented Namecoin [NMC], Litecoin-merged Dogecoin [DOGE], as well as Myriadcoin [XMY] that is merged with both Litecoin [LTC] & Bitcoin [BTC].
Within the recent report, Binance research revealed that merged mining might “potentially offer an opportunity” to further increase mining rewards within the light of future block reward halving scheduled for both Litecoin and Bitcoin. On the other hand, other smaller chains might conjointly probably shift to AuxPoW so as to support the next level of network security whereas reducing the requirement for a separate mining set, the firm added .
At the same time, Binance Research also warned regarding the potential shortcomings of merged mining from both a miner’s and a project team’s views. Miners might not be incentivized to support the child blockchains due to a significant level of including operations costs as well as the possible declines within the given coin’s market value.
From the view of a project team operating on a PoW ‘cryptocurrency‘-asset, risks embrace dependency on the parent blockchain and new potential attack vectors.
Within the report, Binance Research conjointly outlined Dogecoin, that has been operating for over six years from now, as the most fortunate example of merged mining. Earlier in August 2014, Dogecoin adopted for the merged mining model, the coin’s mining hashrate jumped by around 1,500% while conjointly showing correlation with Litecoin’s hash rate. As per the report, nearly 90% of Dogecoin’s total hash rate derives from the large Litecoin mining pools as of July 2019.
Earlier on 5th July, Binance exchange ‘listed‘ Dogecoin on its cryptocurrency trading platform. On the same day, the exchange published its “2019 Q2 Crypto-Correlations Review,” outlining that Dogecoin has less correlated with other cryptocurrencies in Q2 2019, along with Bitcoin. However, the coin has continued to be considerably correlated with Litecoin, mainly due to the shared mining of 2 coins, the firm added.
Also on 9th July, the mining difficulty level of the leading cryptocurrency Bitcoin [BTC] ‘reached‘ incomparable all time new highs by hitting a 9.06 trillion at an avg. hash rate of roughly around 64.85 quintillions per second [EH/s].