Money Left on the Table

Nathan Hatzfeld wants miners to look at the work they are already doing and ask who is getting paid for it. Hatzfeld handles business development at Syscoin, and he spoke at Mining Disrupt Miami 2022, held July 26 to 28, 2022, about merged mining, a feature of Bitcoin he called overlooked. Bitcoin was trading near 21,268 dollars at the time. Today it is around 82,165 dollars.

Merged mining lets a miner take the hash it is computing for a Bitcoin block and apply that same work to other chains at the same time. Hatzfeld traced the idea to Satoshi in 2010 and said Namecoin made it a standard; ten to twenty coins are merge mined today. Citing data a couple of years old, he said about ninety percent of Bitcoin blocks carried headers from side chains, and that today the figure is probably close to one hundred percent.

His argument starts with what he called Bitcoin's longevity problem. The subsidy falls at every halving, and on-chain fees are capped by the block weight. Eight years out, he said, Bitcoin production drops sharply, and the price would have to rise exponentially, perhaps past a million dollars, to make up for it. There is no guarantee of that. Merged mining, in his view, is a third source of revenue that keeps the security budget high. His example was Litecoin and Doge, where mining Doge is roughly two to three times as profitable as mining Litecoin alone. Under proof of work, he said, a network is exactly as secure as it is hard to attack, and more revenue on chain makes an attack costlier.

The pitch to miners was simple. No extra cost, no overhead, no downtime risk, no added complexity. Setup takes under twelve hours and often about an hour plus blockchain sync time. He called the unclaimed rewards money left on the table. The catch is awareness. Most of the miners he has spoken with did not know about it, and most pools seem to merge mine quietly, collecting the coins on the back end without sharing them with the miners who connect. His ask was for miners to go to their pools and start asking to merge mine these tokens.

Hatzfeld is co-founding the Global Merge Mine Alliance with the partner team Jax Network, a network meant to gather the merge-mined tokens in one place where people can share research and build. Syscoin itself, he explained, is essentially Ethereum running on SHA-256, and Jax Network is a layer-one chain that burns Bitcoin to mint a stablecoin. The full story is on Mining Disrupt at miningdisrupt dot com, and many more like it play around the clock on Bitcoin Radio.