Dogecoin is one of the most popular cryptocurrency tokens you can mine, which leads many people to ask how to mine Dogecoin and if Dogecoin mining profitable in 20233.
One of the key aspects of this curiosity is due to the fact that when mining Dogecoin, things get interesting as the competition is a lot less congested than it is with the likes of Bitcoin and Ethereum; however, it is far from easy.
What is Dogecoin?
Dogecoin, also known as DOGE, has gathered quite a lot of attention in 2021. Since its inception in 2013 as a meme cryptocurrency, it has dominated online forums as a tipping mechanism. However, through various social media headlines and celebrity shout-outs from the likes of Mark Cuban and Elon Musk, it has gathered quite a large community, and with this increase in demand, so has its value.
New blocks are discovered much faster. However, DOGE’s value is much lower when compared to Bitcoin’s. Nonetheless, Dogecoin miners generate 10,000 DOGE per block, whereas Bitcoin miners generate 6.25 BTC.
Let’s dive in to get a perspective on how mining Dogecoin 2023 works.
Want to buy Dogecoin but not sure how or where? Check out our guide on how to buy Doge.
What is Dogecoin Mining?
The Dogecoin (DOGE) mining process is very similar to Bitcoin’s (BTC) network, as well as Litecoin’s (LTC) network. Dogecoin’s blockchain is secured through a Proof-of-Work (PoW) mechanism, which is the mining process that involves individuals or organizations having to compete to add new blocks that contain pending transactions to the blockchain ledger through the usage of computing power.
How Does Dogecoin Mining Work?
Miners will use their machines with the goal of creating a “hash” that has a value that is equal or lower than the target value of the new block. This new block is called a “target hash”. The miner who creates the winning code will earn the right to add new transaction data to the next block in the chain. Here, they get rewarded with the newly minted Dogecoin (DOGE) tokens. You need to keep in mind that each hash is generated randomly, making this difficult for miners.
These Proof-of-Work (PoW) blockchains typically have a pre-determined total supply of coins that have to be minted in order for them to be added to the circulating supply. However, one of Dogecoin’s negatives is there is no limit, and its circulating supply will continue to increase indefinitely as new coins are created. As a point of comparison, here we will be using Bitcoin. In the case of Bitcoin’s blockchain, a hashing algorithm known as SHA-256 is used. This hashing algorithm is a function that generates a fixed-length code through the usage of a specific method.
Dogecoin and Litecoin, on the other hand, use a hashing algorithm known as Scrypt. This is far less complex than SHA-256 and, as such, makes them faster and a lot less energy efficient to mine when we compare them directly to Bitcoin. Both Dogecoin and Litecoin use this common algorithm, and as such, they have enabled what is known as merged mining. Merged mining means that both coins can be mined simultaneously without impacting any operational efficiency.
The main reason why they share this common mining algorithm is that Dogecoin is based on Luckycoin, which was based on Litecoin, to begin with.
What is a DOGE Miner?
A Dogecoin (DOGE) miner is the hardware that participant nodes on the Dogecoin network will use to carry out the mathematical calculations required to check and validate the incoming transactions on Dogecoin. This hardware needs to be accompanied by specific software that makes all of it work. There are several types of Dogecoin miners, such as Computer processors, Graphics cards, and ASIC miners.
What you need to Start Mining Dogecoin
To start mining Dogecoin, there are a few things to consider, such as the hardware, software, and cryptocurrency wallet you will be using.
On the hardware side of things, there are three distinct types of hardware (or equipment) that you need to mine DOGE. You can use your CPU or your PC’s central processing unit. However, this is not recommended because it has the potential to overheat and, in turn, damage your computer. CPUs are powerful enough to handle the stress of mining DOGE. However, GPUs are a lot more suitable.
Then you have the GPU or graphics processing unit, which is a lot more powerful than a CPU specifically for mining and is the go-to option for a lot of miners.
Last but not least, you have what is known as an ASIC or an application-specific integrated circuit. This is a computing machine that is specifically built to generate hashes. This is far more powerful than a GPU and a lot more expensive as a result. For Dogecoin specifically, you need to look at a Scrypt-specific ASIC miner.
After choosing your hardware, you need to look at different software (depending on your chosen method). For CPU mining, you can use the CPU Miner by Pooler.
Then you also have the Bitmain Antminer L7, Goldshell LT5, and the Innosilicon A6+ miner.
So now you have the hardware and software, but where will you store your newly mined DOGE tokens? This is where cryptocurrency wallets enter the picture.
A Dogecoin (DOGE) wallet plays an essential role when it comes to mining, as it will provide a secure place where you can receive dogecoin rewards that are generated from mining. It consists of a public key address, through which you can send or receive DOGE, as well as a private key, through which you can access it. There are multiple types of wallets that you need to be aware of.
First, you have the most common type of wallet, an online wallet. This is a wallet typically connected to an online exchange, and it’s online all the time. This makes it the least secure type of wallet because it’s always online, and it always has a slight chance of being compromised.
Software wallets are installed on your PC or mobile device. This makes them a bit more secure. However, you will get to a point where you will also connect these to the internet.
The most secure type of wallet there is the hardware wallet. A hardware wallet is a wallet that is not always connected to the internet, and as such, it is an offline, cold storage device, which is typically a device such as the Ledger Nano or the Trezor wallet.
4. Other Things Worth Considering when Mining
Always take a second look at your setup before engaging in mining Dogecoin. This includes the storage requirements as well as the temperature control. Mining can cause overheating, which can reduce the lifespan of your hardware; as such, you need to establish cooling setups for your mining device. Cooling requirements will vary depending on the device. However, GPUs will tend to require cooling a lot more when compared to other types of miners.
Then you need to consider the noise. Specifically, ASIC mining rigs are known for being a bit loud, especially if you have more than a single device. Additionally, you also need to consider where you will place your setup before buying it. ASICs are best placed within a cool environment that is soundproof.
Mining Dogecoin: An In-depth Look
When Dogecoin first launched, only a few people actually participated in the network. Over time, however, a lot more people started mining, and as such, things got a lot more difficult, especially for newcomer miners with limited hardware. As such, miners began coming together in what is known as mining pools.
A mining pool is a group of individual miners who mine cryptocurrency. However, they do so as a single entity or node. This works as they are essentially merging their computing power. These rewards are distributed across pool participants proportionally. The amount of power committed by each miner is taken into account. This is their own Dogecoin mining calculator that’s built-in within each Dogecoin mining pool.
If you were to start mining the Dogecoin (DOGE) cryptocurrency today, there are multiple routes that you can take. For one, you can engage in individual or solo mining. Second, you have mining pools, and third, you have cloud mining methods.
Let’s assume for a second that a user wants to start mining DOGE. Here, the user can do so independently by simply using a graphics processing unit or GPU through software such as EasyMiner.
The GPU, in this case, would be responsible for the mining process. However, you need to understand right away that, for a single miner, mining can be a difficult process that is usually not as profitable as expected unless that specific user wants to invest heavily in some of the highest-grade equipment for mining out there. Furthermore, once the equipment in question is bought, they would have hefty monthly electricity bills.
Joining a Mining Pool
There are other types of miners who are enthusiastic about cryptocurrency or want to try entering the “mining game.” Joining a pool, in this case, comes heavily recommended because they have a better chance of becoming a block validator because of the collective hashing power of the entirety of the pool.
What you need to know right away, even before joining a pool, is the fact that typically, any user within these pools needs to pay a specific percentage in fees for the privilege of participating. Each pool calculates the payouts for each member. There are multiple types of pools, including a Prohashing pool and an AikaPool. One of the most popular mining pools that might be worth checking out is Nicehash.
Cloud mining allows users to rent computing power from a data centre and pay a monthly or annual fee based on the contract in question. The selected coin is then mined at the centre through a mining pool and shared with the user based on the computing power they are paying for.
However, this isn’t a perfect system and has its set of drawbacks. For one, most contracts are limited because you can lose money if the DOGE prices drop below the operational and electrical costs associated with mining the token. That being said, this can indeed be an efficient way of mining, just as joining a mining pool. The main advantage here is that the user is not required to purchase, set up, and run any specialized equipment, and anyone can do so.
Step-by-Step Guide to Mining Dogecoin in 2023
Here is a step-by-step guide on what you need to get started mining Dogecoin. First thing, before you start buying mining hardware, ensure that you have an uncapped and fast internet connection and a reliable source of electricity.
- Step 1: Choose your hardware. The first thing you need to do is select what kind of hardware you will be using in order to mine Dogecoin.
- Step 2: Choose your software. Select the proper software, download and then install it.
- Step 3: Choose a cryptocurrency wallet. This is an important step, as this is where your earnings will go, so ensure that you can secure it by memorizing your seed phrase and storing your private key safely. Ensure that it is a wallet that supports Dogecoin.
- Step 4: Launch your mining operation. Run the mining software and watch your miner generate DOGE tokens for you. The software you have selected should provide you with information on how much you are earning per hour.
- Step 5: Join a mining pool or set up a cloud mining service, assuming you want to go this route.
Is Dogecoin Mining Profitable in 2023?
Dogecoin (DOGE)achieved its all-time high in value on May 8, 2021, with a value of $0.731578. With this in mind, we can expect that the value of Dogecoin will increase as cryptocurrencies gain mainstream appeal.
However, investing in Dogecoin mining can be expensive and not something you should consider lightly. You will need to consider everything we mentioned above, such as the hardware, electricity costs and storage. Gone are the days of money-strapped student mining on their laptops. If money is to be made, the big boys will come with expensive, faster and more energy-efficient miners.
Plus, it will also depend on when you´re reading this Dogecoin mining guide. So make sure you do your homework before making that investment. Sometimes it´s best to play it simple, just buy and hold the cryptocurrency and forget about all the noise.