A data driven analysis of the bitcoin merge mining phenomenon.
From the perspective of bitcoin, merge mining is the inclusion of arbitrary data in the bitcoin coinbase (the transaction which pays miners the block reward). There are two places merge mined data is often embedded;
- The coinbase input scriptsig. Usually this is done following the AuxPow protocol which enables multiple merge mined chains to be extended with a single piece of data.
- A coinbase transaction output script. Usually this is done as a 0 value OP_RETURN which includes a tag unique to each merge mined chain.
In either case the amount of data added to the bitcoin blockchain is very minimal, yet allows miners to construct blocks on the merge mined chain and earn additional fee revenue on the other chain. The tradeoff is that they have to run additional software to modify their coinbase transaction, and need to source the data to embed (either by running the merge mined chain node or using a 3rd party service).