Merge Mining Delivers Extra Rewards With Zero Added Cost

In 2025, cryptocurrency adoption has reached new heights. From retail, enterprises, corporations, and even governments, a growing number of institutions are realizing the true potential of crypto and its underlying blockchain technology. 

Blockchain is a shared, immutable digital ledger that is reshaping how data, value, and trust are moved and managed in digital systems. It operates as a decentralized distributed database, with data stored across multiple computers, making it resistant to single points of failure, tampering, and censorship. 

These computers or miners, which are spread all over the world, are a key part of the technology as they ensure the decentralization and security of a network.

Miners are central to how cryptocurrencies, like Bitcoin (BTC +0.44%), function. They validate and confirm transactions before including them in blocks, preventing double-spending. For this, miners must solve complex cryptographic puzzles, and if successful, they earn rewards in native crypto like BTC. It is this way that new coins are created and introduced into circulation. 

This entire process that miners engage in is called mining, and it decentralizes systems, provides stability and security for the network, and rewards miners.

Usually, a miner utilizes their hardware to only mine one cryptocurrency at a time, but it is possible to mine more than one. 

Through merge mining, miners can double their rewards for the same amount of resources, making it a highly lucrative opportunity.

What Is Merge Mining (AuxPoW) and How It Works

In the ever-evolving crypto landscape, much like investors and traders, miners are also constantly looking into new and exciting ways to maximize their returns.

One of the innovative and cost-effective ways to achieve that is through merge mining.

Back in 2010, Bitcoin’s pseudonymous creator, Satoshi Nakamoto, first introduced this concept, where “networks share and augment each other’s total CPU power.” Also, that makes “it easier for small networks to get started by tapping into a ready base of miners,” per Nakamoto.

So, merge mining has been in existence for a long time now, but it has not been widely talked about. Merge mining, basically, is a process that enables miners to mine several cryptocurrencies at the same time using the same hardware and hash algorithm.

Also called Auxiliary Proof-of-Work (PoW) or AuxPoW, the miner performs only one hashing operation, such as SHA-256 (Secure Hashing Algorithm 256 bits) in the case of Bitcoin or the Scrypt hashing algorithm for Litecoin (LTC -3.13%). That single computation is then applied to both the main chain and the auxiliary chains.

When a miner discovers a valid block for the auxiliary chain, they submit it. The chain then uses AuxPoW to verify the block before publishing it, while the miner receives the tokens and fees as a reward for their contribution.

The process doesn’t require any extra computing power or energy, just the technical support from the mining hardware and the mining pool or software. So, without any extra efforts, miners can significantly boost their rewards.

While participating miners enjoy increased profitability, the secondary chain benefits from the hashpower of the main, larger chain, which boosts overall network security. 

But the auxiliary chain is not the only one benefiting here; even bigger chains like Bitcoin stand to gain from merge mining.

When it comes to digital gold, Bitcoin, it is facing a declining block reward subsidy, which has many participants concerned about its long-term security. In 2009, the reward was 50 BTC per block, and after four halvings, it now stands at a mere 3.125 BTC. 

The next halving in 2028 will bring it down to 1.5625 BTC, and by 2032, miners won’t even get one BTC per block.

With Bitcoin halving reducing block rewards for miners every four years, merge mining can provide an effective solution to ease their financial pressures. Miners can diversify their income stream at a negligible cost, as miners only have to run an extra full node with no need to split their computational resources or invest in additional hardware.

Through merge mining with L2s, the Bitcoin ecosystem can also continue to experiment and expand its ecosystem. These sidechains can innovate and introduce new features without risking the main Bitcoin chain’s stability and security.

On top of that, as Satoshi envisioned, merge mining can prevent the fragmentation of hash rate. By having the most valuable crypto asset, Bitcoin, as the main focus to ensure that it keeps the dominant hash rate share, the dilution of computational power across multiple chains is prevented, while the security of all involved networks is maintained.

However, despite having many benefits, merge mining isn’t really widespread. There are several reasons behind that.

For starters, not every coin is compatible with AuxPoW; only a handful can be mined this way. Also, supporting new chains requires maintenance work for mining setup, wallet management, and payment processes, which can discourage mining pools from supporting merge mining.

Not to mention, the high mining costs of the PoW consensus algorithm itself have caused it to lose popularity to the Proof of Stake (PoS) consensus mechanism, which is being widely adopted across the crypto space.

Then there are the security risks for the less popular chains. A dominant miner or pool participating heavily in merge mining can purposely or unintentionally concentrate power on the auxiliary chain, raising the risk of 51% attacks.

The benefit of attracting more hash power with merged mining means the difficulty of auxiliary chains can increase significantly. This, in turn, diminishes the rewards for miners, making it more difficult and less profitable for individual miners to mine auxiliary coins.

That’s why, despite its many benefits, a handful of coins have turned to merge mining. Still, there is a remarkable example that shows just how this approach can work seamlessly, securing one network while making another far more rewarding for miners.

The Biggest Case for Merge Mining: Litecoin–Dogecoin

Now, let’s take a look at some prominent examples of how merge mining plays out in actual practice, reshaping entire ecosystems.

Namecoin (NMC -1.24%) was the first one to merge mine with Bitcoin (BTC) back in 2012.

Then over the next few years, the likes of Viacoin, Elacoin , and Syscoin (SYS -4.92%) also supported mining alongside Bitcoin.

Besides Bitcoin, its fork, Litecoin (LTC -3.13%), is another popular cryptocurrency that is involved in merge mining with multiple coins. It acts as the parent chain for a number of auxiliary coins, with each utilizing the same Scrypt algorithm that Litecoin uses.

This is available via major pools like Binance Pool, ViaBTC, and F2Pool.

Just by connecting their Litecoin hashrate to these mining pools, miners automatically receive auxiliary coin rewards in addition to their LTC earnings. These popular, global crypto mining pools enable seamless integration to encourage more miners to optimize their returns.

While many altcoins turned to Bitcoin and Litecoin, the most prominent example of merge mining is Dogecoin (DOGE -4.64%), which has been operating securely for about a decade now. 

Dogecoin derives its security from Litecoin. 

That’s right, it is Litecoin, which is far less valuable and adopted than Dogecoin, that is helping maintain its security. These two are major coins that have been in existence for more than a decade and offer great profitability to miners.

Litecoin was launched in 2011 by former Google engineer Charlie Lee as the ‘silver’ to Bitcoin’s ‘gold’.

Being a fork of Bitcoin, Litecoin goes through the same four-year halving cycle and has a fixed supply, but capped much higher at 84 million than Bitcoin’s 21 million coins. Designed to overcome Bitcoin’s challenges, Litecoin is much faster, having block times of 2.5 minutes compared to Bitcoin’s 10 minutes per block. 

Litecoin uses the Scrypt algorithm, originally chosen to broaden miner participation. Today, however, Scrypt-specific ASICs dominate Litecoin/Dogecoin mining, so decentralization depends more on pool distribution and miner geography than on the algorithm choice itself.

With a market cap of $8.6 billion, LTC has been trading at $113, up 13% year-to-date (YTD) and down 72% from its all-time high (ATH) of $410 that was hit in May. 2021.  

Dogecoin (DOGE), meanwhile, is the original and most popular meme coin. 

It came into existence two years after Litecoin’s launch. Software engineers Billy Markus and Jackson Palmer created Dogecoin in 2013 by cloning Luckycoin, which was a clone of Litecoin itself. 

With both blockchains running on the PoW consensus mechanism using the Scrypt algorithm, an ASIC miner that can mine LTC can also mine DOGE simultaneously with the same hash rate, given that the connected mining pools support their merge mining.

The meme coin, however, has no limits on its supply, which has now reached past 150.8 billion.

Dogecoin was one of the fairest launches of the crypto market, like Bitcoin, with no token presale, pre-mine, or venture capital fundraise. And that has made it extremely popular among retailers.

With a market cap of $32.7 bln, DOGE is trading at $0.220, down almost 31% YTD and 69.9% from the $0.73 peak hit four years ago.

While prices remain subdued in the bull market, a growing number of not only crypto miners but also large firms are turning to Dogecoin and Litecoin. This makes sense, as mining Bitcoin with its $2.25 trillion market cap has become extremely difficult, competitive, and costly.

At a Mining Disrupt conference earlier this year, Alan Martinez, Marketing and Business Development Manager at crypto-mining hardware provider JSBIT, noted that Doge mining is still being mainly explored by small businesses that are treating this as a side hustle, but they’re also having “talks with big-name companies listed on Nasdaq that are looking into this.”

How LTC Secured DOGE Against Attacks

While not much is happening on Litecoin and its miner revenue is also low, in negative actually compared to $7.56 per day per machine mining Dogecoin and $11.58 per day from Bitcoin, the network is still playing a big role in the crypto space. It is providing security to the widely adopted Dogecoin.

Virtually all LTC miners are also mining DOGE, making crypto mining attractive again as the market evolves.

As the crypto mining space becomes more complex and competitive, the merge mining of Litecoin and Dogecoin has been gaining a lot of traction. However, the actual integration happened many years ago.

The proposal for the same was made in 2014 by Litecoin’s Lee due to Dogecoin’s fast-declining network security.

“Using the startup analogy, imagine if Coinbase paid 95% of its equity to its employees hired in its first year, how could it hire good people after its first year? Is it still possible to succeed? Yes, but it will be really, really hard.”

– Lee said at the time in an AMA on Reddit

The meme coin was designed with a very high rate of coin distribution in its first year of launch, so high that half of its circulating supply was paid to miners in just the first four months. For instance, 6.58 billion DOGE were mined in just a week after launch.

Its fixed supply of 100 billion, which lasted until 2015, was depleted rapidly due to the fact that blocks were generated every minute and rewards were halved every 69 days. Without a subsidy, if transaction fees remain too low due to low activity, miners may leave the network, jeopardizing its security and leaving the chain vulnerable to attack.

Lee offered to unite with the Dogecoin community to protect itself as well as Litecoin against the attack.

“Right now, every miner mining Dogecoin (or any other Scrypt coin) is a miner that is not mining Litecoin. So Litecoin’s security is a lot less than it could be. So merging mining with Dogecoin would make both Litecoin/Dogecoin almost impossible to 51%.”

– Lee said over a decade ago.

Just a few months before the meme coin was launched, a Scrypt-based cryptocurrency called Feathercoin was 51% attacked. 

So, the risks and concerns were very real at the time. Dogecoin had to hard fork to allow merged mining. This transition to AuxPoW protected it from being attacked easily.

As a result of the permanent changes to its blockchain, the hard cap on supply was removed to allow for 10,000 DOGE rewards per block. With merge mining, Litecoin miners get to earn this reward, supplementing the 6.25 LTC per block.

Hashrate Harmony & Increased Profitability 

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At its current depressed prices, the income earned from Doge may not be much, but as we have seen during bull markets, it has the potential to be massive.

During rallies, miners can earn substantial profits, which in turn drives Scrypt mining rig prices to skyrocket in secondary markets, as seen when the average price of a common Scrypt miner, Bitmain Antminer L3, surged about 560% in less than six months.

Back in 2021, Dogecoin was up an eye-watering 9,537% up until May, making it one of the best performing coins, which helped it become the 4th largest asset by market cap of over $70 bln. These gains came on the back of a lot of activity, with its trading volume skyrocketing to $70 bln on its busiest day at the time.

This shows that while the meme coin may have been created as a joke, to mock Bitcoin and the rise of altcoins, it has captured the world’s attention.

Even Tesla (TSLA +0.76%) and SpaceX CEO Elon Musk was, at one point, enamored with the meme coin. While he may have dropped mentioning DOGE, it continues to be the largest meme coin today, despite the mania that has led to the launch of millions of new meme tokens.

Despite its price struggles, DOGE is maintaining its place in the top 10 coins by market cap, while LTC stands at 28th place.

In May 2021, Dogecoin’s merged mining profitability flipped Litecoin by more than 200%.

The mining revenue per one gigahash per second (GH/s) of computing power in one day increased 10x in a month to $25 at the time, as per data from Bitinfocharts. In comparison, the mining revenue of one GH/s on LTC only grew 60% to $8 during that period.

Even as of writing, Dogecoin mining profitability is at about $1.077 per day for 1 GHash/s, while Litecoin’s is $0.1408 a day for 1 GHash/s. This shows that merge mining is working in favor of LTC miners.

For Dogecoin, it means security. So, it won’t be wrong to say that Dogecoin likely would have failed early on without Litecoin.

When miners first started participating in merge mining, Dogecoin’s hashrate experienced a massive jump. It went from just over 70 GH/s in early Sept. to 1.528 TH/s in late Dec. 2014. 

Since then, both Litecoin and Dogecoin’s hash rate have been moving in line with each other, save for a few exceptions. While they maintained high correlation, in Dec. 2017, the spread between the two increased sharply as new mining pools started mining just LTC. 

Currently, the hash rate on Dogecoin is 3.03 PH/s and 2.72 PH/s on Litecoin, meaning the meme coin has more power directed at it to secure its network and earn reward that makes it harder for attackers to reorganize the blockchain. The mean hash rate, meanwhile, is about the same.

So, the total computing power securing the Dogecoin network remains in harmony with that on Litecoin, thanks to major mining pools like Antpool, F2Pool, Viabtc, and Litecoinpool.org supporting merge mining.

Merge Mining’s Proven Value and the Road Ahead

Merge mining is an innovative approach that enables miners to maximize their returns without incurring additional costs, thereby benefiting two networks simultaneously. While not widely adopted, in cases where it has been applied, it has strengthened ecosystems by aligning incentives between miners and networks.

It actually offers a potential solution to Bitcoin’s security budget. As Bitcoin halvings continue to slash rewards, merge mining could emerge as a vital tool for miner profitability and long-term blockchain security.

And as we are seeing with Litecoin and Dogecoin merge mining, this practice can transform a struggling network into one of the most secure and profitable ventures. So, it wouldn’t be wrong to say that Litecoin is the backbone of Dogecoin. 

It is actually preparing for a big development of its own, a potential Spot ETF, which Bloomberg analysts have given high odds of eventual approval thanks to LTC’s commodity classification.

If the spot ETF gets approved, it can send the prices of LTC higher. This can further increase the incentive for miners to operate and stay active in the network, indirectly reinforcing the security of both Litecoin and Dogecoin through increased hashrate!

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