The Bitcoin ecosystem has taken steps to extend its reach beyond the base chain and its limited capacity; while a lot of focus remains on layer two solutions like Lightning, it’s not the only method of moving Bitcoin from one use to another without touching the chain.
Another option is to use a side-chain, like the Liquid Network or a side-chain, like Rootstock, that uses merge mining. Rootstock has been around for 7 years now, since the Mainnet deployment back in January 2018.
The network has slowly grown its hash rate, pegged in Bitcoin and user base, and according to data from Rootstocks Block Explorer, the network currently holds 2,834 RBTC across 98,646 active accounts.
Recently, Foundry, a leading Bitcoin mining pool, announced its support for merging mining Rootstock (BTC). The move unlocks additional computational power that can be contributed to the Bitcoin layer-2 network without increasing energy consumption and security guarantees.
Foundry will inject 200 exahashes per second to bring Rootstock’s total to 740 EH/s, which brings RSK’s hash rate up to 71.7% of the Bitcoin network.
What’s With The Hype Around Merge Mining?
Merge mining allows miners to simultaneously mine two different blockchains using the same computational power. Essentially, miners can submit their proof-of-work for both the primary blockchain (in this case, Bitcoin) and a secondary blockchain (Rootstock) at the same time. Â
This is possible because the proof-of-work algorithm used by both chains is compatible.
Think of it as hitting two birds with one stone – miners get rewarded in both Bitcoin and rBTC (Rootstock Bitcoin) for the same computational effort.
Crucially, merge mining doesn’t require miners to dedicate extra resources.
The existing hash power used for Bitcoin mining is simply leveraged to secure and validate transactions on the Rootstock network as well. This makes it a highly efficient process, maximising the utilisation of mining hardware and energy.
The Benefits: Throughput, Energy Efficiency, and Security
Foundry’s decision to merge mine Rootstock brings several key advantages to the table.
Firstly, it significantly increases the security and reliability of transaction throughput and block space available on the Rootstock network. By piggybacking on Bitcoin’s massive hash rate, Rootstock can process more transactions per second and accommodate larger blocks, leading to faster confirmation times and reduced congestion. This is crucial for scaling smart contract platforms and enabling wider adoption.
Secondly, merge mining offers a significant boost in energy efficiency. Since the same computational power is used for both chains, the energy expenditure per transaction is effectively reduced.
Imagine the environmental impact of every smart contract platform requiring its own dedicated mining network. Merge mining offers a far more sustainable approach, maximising the utility of existing Bitcoin mining infrastructure. Essentially, it allows for more transactions to be processed per unit of energy used, making it a greener solution.
Thirdly, merge mining enhances the security of the Rootstock network. By leveraging the vast hash power of the Bitcoin network, Rootstock becomes significantly more resistant to attacks. The larger the combined hash rate, the more difficult and expensive it becomes for malicious actors to manipulate the blockchain. This increased security fosters trust and encourages further development and adoption of the platform.
Finally, the profit motive. Mining is a very competitive and unpredictable game; today, you could find a block, and it could be days, weeks or months before you secure another one. Mining pools are designed to smooth out this payout structure, and if they can secure additional revenue from side-chains, it can increase the reliability of payments to that pool, which feed downstream to each miner providing hash rate.
The Competitive Landscape: Mining Pools and Hash Rate
Mining pools like Foundry play a critical role in the Bitcoin ecosystem. They aggregate the hash power of individual miners, increasing their chances of finding blocks and earning rewards.
In a competitive landscape, mining pools must constantly innovate and offer attractive incentives to retain their hash rate. Supporting merge mining is one such way to stay ahead of the curve.
By offering merge mining capabilities, Foundry provides its miners with an opportunity to earn additional revenue in rBTC without any extra effort. This makes Foundry a more attractive option for miners, helping them maintain and even grow their hash rate.
In turn, a larger hash rate strengthens the security and stability of both the Bitcoin and Rootstock networks. This could bring in more app developers to work on supporting the network; more users could then pay attention to it, leading to more Rootstock transactions and more fees for miners.
The Ripple Effect: Liquidity and Layer-2 Solutions
Perhaps one of the most significant benefits of Foundry’s move is its potential to boost liquidity for layer-2 solutions on Rootstock.
As more miners earn rBTC through merge mining, they are more likely to participate in the Rootstock ecosystem, including providing liquidity for decentralised applications (dApps) and other layer-2 solutions.
Layer-2 solutions are crucial for scaling Bitcoin’s functionality beyond simple transactions. They enable more complex operations, such as smart contracts and decentralised exchanges, to be executed off-chain, reducing the load on the main Bitcoin blockchain.
Increased liquidity on Rootstock facilitates the development and adoption of these layer-2 solutions, unlocking a whole new world of possibilities for Bitcoin-based applications.
A Win-Win for Miners and Rootstock
Foundry’s decision to support merge mining Rootstock offers a compelling combination of increased throughput, improved energy efficiency, enhanced security, and boosted liquidity for layer-2 solutions.
By extending the value of existing Bitcoin mining infrastructure, merge mining provides a sustainable and efficient way to expand the functionality of the world’s most popular cryptocurrency. Since Rootstock is an EVM-compatible chain, a lot of what becomes popular on altcoin chains can easily be ported over to Rootstock, and you can enjoy a more secure network and deeper pool of liquidity found in the Bitcoin ecosystem.
This move by a major player like Foundry signals a growing recognition of the potential of merge mining as a future revenue driver and its benefits for both Bitcoin and its associated smart contract platforms.
As more mining pools adopt this approach, we can expect to see further improvements in scalability, security, and the overall usability of the Bitcoin ecosystem, paving the way for wider adoption and innovation.
It’s a win-win situation, strengthening both Bitcoin’s foundation and the burgeoning world of decentralised applications built upon it.
