The research department of Bince, a cryptocurrency exchange, released a report on July 12 that combined mining could mitigate the impact of halving of bitcoin (BTC) and Litecoin (BTC) mining block incentives.
After Charlie Lee predicted that some miners might stop Litecoin mining after the halving of the award on August 5, 2019, Binance Research analyzed the potential of the so-called “consolidated mining” to retain the enthusiasm of the encrypted miners.
Merging mining is the work done to build a blockchain or a parent chain through the implementation of Auxiliary Work Proof (AuxPoW) for other smaller sub-chains. So far, there have been three major cases of combined mining, including Namecoin (NMC) derived from the Bitcoin blockchain, Dogecoin (DOGE) combined with Litecoin, and Myriadcoin (XMY) merged with LTC and BTC.
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In this report, the Binance research department concluded that the combined mining could “provide potential opportunities” for increased mining incentives in the event that the future block rewards of Litecoin and Bitcoin are halved. Binance added that other smaller chains may also turn to Auxiliary Work Certificates (AuxPoW) to ensure a higher level of network security while reducing the need for a single mining equipment.
At the same time, the Binance research department also warned of potential defects in the combined mining from both the miners and the project team. Due to the high operating costs and the potential decline in the currency price, miners may lose the incentive to support the sub-blockchain. From the perspective of a project team that operates PoW cryptographic assets, the risks they face include not only the dependency of the sub-chain on the parent chain, but also the potential new attack vectors.
In the report, Binance Research also believes that the operation of dog money for about six years is the most successful case of mining. After adopting the merge mining model in August 2014, the dog's coin has increased its mining hash by 1,500%, showing the correlation with the Litecoin hash value. According to the report, as of July 2019, the total hash rate of almost 90% of the dog's coins came from the large Litecoin pool.
On July 5, Dogecoin appeared on the Binance Exchange's encrypted trading platform. On the same day, the exchange issued the "Password-Related Comments for the Second Quarter of 2019", stating that the Dogecoin, like Bitcoin, showed a low correlation with other cryptocurrencies in the second quarter of 2019. However, the dog currency has remained significantly associated with Litecoin, which is mainly caused by joint mining in two currencies.
On July 9, Bitcoin's mining difficulty reached a record high of 9.06*1012, with a hash value of an average of 64.85*1018 per second.