What is Dogecoin Mining and How to Mine Dogecoin
Dogecoin’s humble beginnings as a joke cryptocurrency that revolved around a Shiba Inu “doge” meme, have seen a lot of progress since then. What was once a parody project created by software engineers Jackson Palmer & Billy Markus to be “as ridiculously possible,” is now a top 15 crypto asset with a $22 Billion market capitalization and a worldwide fanbase. Dogecoin’s dramatic rise in the first half of 2021, largely driven by internet pop culture, and constant promotion from Tesla CEO Elon Musk led to significant interest in dogecoin mining, and improve mining profitability to a new six-year high.
Despite its recent success, mining dogecoin still remains less competitive than mining bitcoin. However, it is still challenging. The discovery of new blocks is much quicker and the coin rewards are significantly higher at 10,000 DOGE per block reward, compared to 6.25 BTC.
How does dogecoin mining work?
Dogecoin’s Blockchain Network uses the same system to add new blocks to its decentralized ledger and reach agreements among its network members such as Bitcoin, Litecoin, and other cryptocurrencies.
This is known as the “Proof of Work” (PoW) mechanism that process involves involves “mining”, where individuals or organizations compete to be the first to add blocks containing pending transactions onto the blockchain ledger.
Miners use their machines to create a fixed-length code, called a “hash”, with a value equal to or less than the target value for the new block. This is known as the “target hash .” The winner of the code contest earns the exclusive right of adding new transaction data to each block in the chain. In return, is rewarded with newly minted coins.
Each generated hash is completely random, so it’s just a matter of trial and error until you win.
PoW blockchains like bitcoin and litecoin have a predetermined total supply that must be mined to increase the circulating supply. This is usually 21 million and 84 million, respectively. It’s like actual mining, where precious gems and gold must be physically mined before they are available for sale.
Dogecoin does not have a cap on its supply, unlike many other cryptocurrencies. As new coins are mined, the circulating supply of dogecoin will increase indefinitely.
Dogecoin’s network discovers new blocks approximately every minute. Bitcoin blocks are discovered on average every 10 minutes.
Dogecoin mining is a slightly different process than bitcoin, even though it uses the same Proof of Work system.
Bitcoin is the oldest cryptocurrency and has the largest market capitalization. It uses SHA-256 as its hashing algorithm. Although it may sound complicated, a hashing algorithm simply generates a fixed-length number using a particular technique. It can be thought of as a random code generator. Each hashing algorithm generates random codes in its own unique way.
Dogecoin, litecoin and SHA-256 use a hashing algorithm called Scrypt. It is simpler than SHA-256. This allows for faster mining of litecoin or dogecoin and is less energy-intensive than mining bitcoin.
Dogecoin and Litecoin mining can now be “merged mined” using a common algorithm. This allows both coins to be mined simultaneously, without affecting operational efficiency. The two have a common algorithm because dogecoin is based upon luckycoin, This was then derived from the litecoin.
Also read: A Beginner’s Guide to Mining Crypto
How to mine Dogecoin
Dogecoin mining was easier in its early years because there were very few participants in the network. The network was open to everyone, so anyone could mine the coin independently. As DOGE became more popular, however, mining became more complicated. This led miners to form “mining groups.”
A mining pool is an individual group of miners that mine cryptocurrency as one entity or node by merging their computing power. Pool participants are awarded rewards proportionally to the amount of computing power each miner has used.
There are three main ways to mine dogecoin today:
- Individual mining/solo mining
- Dogecoin mining pools
- Cloud mining
Solo mining vs. dogecoin mining pools
Anyone who wants to mine DOGE for enjoyment or to simply understand the process. It can be done by using an independent GPU (graphics processing unit) via software such as EasyMiner. A GPU (graphics processing unit) is a processor that renders all images on a computer’s display. It is used by many desktop and laptop computers to enhance image processing.
Mining by itself can be difficult and rarely profitable unless you are willing to spend significant amounts of money on high-spec equipment or electrical bills.
Crypto enthusiasts who are interested in making a profit with doge mining should join a dogecoin mining group. This pool has a higher chance of being a block validator due to its collective hashing power. Be aware that you will need to pay fees of 1% to 3% to join a mining pool. Also, make sure to check how payouts are calculated for each pool before signing up.
These are some of the most popular dogecoin mining pools in 2022:
Dogecoin cloud mining
Cloud mining can also earn Dogecoin, but that isn’t really mining. Cloud mining is basically renting computing power from a server and then paying a monthly or annual fee according to an agreement. The selected coin is then extracted at the center using a mining pool. It is then divided with you depending on how much computing power was used.
Cloud mining has one major drawback: most contracts are time-locked. This means that you could lose money if DOGE price drops below the operational or electrical costs of mining it.
This can be as efficient as joining a mining pool, and it does not require any special equipment. A wallet with dogecoin is all that’s required to take the cloud mining route.
Cloud mining pools that support DOGE are:
Also read: Blockchain Wallet: A Ultimate Guide to Blockchain Wallet
Dogecoin mining must-haves
Anyone who wants to mine dogecoin by themselves or in a pool with others will need a range of equipment.
Dogecoin Mining Hardware
You can use three types of hardware equipment for DOGE mining.
- CPU – This option might still be available for your PC’s central processor unit, but it is not recommended as it could cause serious damage to your computer if it is overheated.
- GPU- A graphics processing unit can be used to mine Dogecoin and is faster than a CPU.
- ASIC – it is an application-specific integrated circuit that’s a computer designed to generate hashes. ASICs are much more powerful than GPUs, and therefore more expensive. ASICs can be purchased by anyone who is looking for a Scrypt-based ASIC miner.
Dogecoin Mining Software
After you have decided on the hardware you want, you will need software to go with it. These are the top software options currently available:
- CPU – CPU miner by Pooler.
- GPU – is great to use for beginners. CudaMiner works best on Nvidia GPUs while CGminer works well with all types.
- ASIC – CGminer and EasyMiner can also be used with ASICs. However, most ASIC miners use MultiMiner.
A dogecoin wallet can be used to mine and store any rewards. A crypto wallet is a combination of a public key address to send and receive DOGE and private keys to access it. This key must be kept private and cannot be shared with anyone. There are many types of wallets available, including:
- Online: Anyone can mine dogecoin online using an online wallet like Coinbase or Binance. Although they aren’t as safe as other wallet options, these are far more convenient to use.
- Software: Software wallets are stored on your computer or mobile device, rather than online. This makes them safer. You can either download the original dogecoin wallet, or you can use third-party software.
- Hardware: A hardware wallet is the best way to store crypto assets. These physical devices are similar to USB sticks and can store crypto offline. The Ledger Nano S and Trezor Model T are the most popular hardware wallets.
It is important to note that cryptocurrency mining requires both electricity and internet access. ASIC mining is recommended. Rigs should be kept cool and away from other people to avoid overheating or disturbing neighbors with the noise.
Is dogecoin mining profitable?
Dogecoin mining is still profitable. But don’t expect the unexpected. You will have the best chance to make a profit with dogecoin mining if you have powerful hardware and join a pool. A dogecoin mining calculator can help you determine how much you could earn per month.