Merged mining is the process of mining for more than one blockchain network at the same time. The same mining activity used to solve blocks and add transactions to one blockchain can be simultaneously used to complete the same task for another blockchain.
Mining for more than one blockchain does not affect the performance of mining equipment. Merged mining instead offers a sort of “two-for-one” arrangement where they can compete to claim block rewards from more than one network without having to divide their total mining capacity between the two networks.
Successful merged mining requires the same hashing algorithm for both networks: If two networks have different hashing algorithms, they cannot be mined together.
Litecoin and Dogecoin are an increasingly popular merged mining pair, and both of these networks are Scrypt-based blockchains. Bitcoin uses the SHA-256 hashing algorithm, which means that, in theory, any other blockchain-based asset that also uses SHA-256 can be mined along with Bitcoin.