How to Mine Dogecoin
- Real Vision
- June 2, 2022
- 2:05 AM
Overview
- Dogecoin can be mined similarly to Ether (ETH) and Bitcoin (BTC).
- Mining Dogecoin (DOGE) is the process of computers solving mathematical puzzles and adding blocks to the Dogecoin blockchain.
- To mine DOGE, a GPU (Graphics Processing Unit) or an ASIC mining machine is recommended.
- Joining a mining pool is an easy way to start mining Dogecoin.
WHAT IS DOGECOIN MINING?
Dogecoin is a distant Bitcoin fork with several major differences in its source code. However, its mining process works similarly to Bitcoin mining. Just like Bitcoin, Dogecoin is a decentralized cryptocurrency whose digital ledger is maintained by a decentralized network of nodes instead of one single party. As a result, there is no central entity to distribute the cryptocurrency out into the world. Thus, the distribution of coins has been designed in a decentralized manner.
Instead of a pre-mine, where the entire stack of Dogecoin would have been created in one fell swoop before the network’s launch, Dogecoin is issued and released by the protocol in a pre-programmed way — similar to Bitcoin. The receivers of the newly issued Dogecoins are the so-called miners. These vital network participants are the ones that grow the Dogecoin blockchain and are in return rewarded with DOGE. The term mining is an analogy that is borrowed from the process of extracting precious metals from the ground as they also need to be mined at the cost of labor and energy.
Costs and energy are incurred for Dogecoin miners as well, but they are not the result of digging the ground in search of precious metals. The energy used to mine Dogecoin is going to dedicated computer machines, powering processors in a global competition to solve mathematical puzzles. Whichever miner successfully solves this puzzle first and thereby outcompetes his contenders, gets to add a new block to the blockchain and is rewarded with Dogecoin in what is called a block reward. This mechanism handsomely rewards the miners for providing computational power to the Dogecoin network and thereby securing the network for the decentralized handling of peer-to-peer transactions.
Read the guide: What is Dogecoin?
DOGECOIN'S TOKENOMICS
Unlike its big brothers Bitcoin and Litecoin, Dogecoin doesn’t have a fixed upper coin limit and is, therefore, an inflationary currency. But this wasn’t always the case. When created, Dogecoin originally had a fixed coin cap of 100 billion coins and the block reward was set to halve every 100,000 blocks until block 600,000 was mined. After that, the block reward would be at a fixed rate of 10,000 coins until the 100-billion coin cap was reached. According to the mining schedule, this would have been the case approximately one year and 160 days after launch.
However, in the beginning of 2014, three months before the last block reward would have been paid out, the developers decided to give Dogecoin a constant tail emission by keeping the block reward at a flat 10,000 coins per block. Dogecoin thereby became a disinflationary currency with a slowly declining inflation rate (3.6% in 2024, 3% in 2030, 1.5% in 2065, …).
As a result of removing Dogecoin’s hard cap supply, its price began to decrease and the network’s hashrate declined significantly throughout 2014. To protect the network from 51% percent attacks, the developers decided to enable ‘merge mining,’ which allowed the Dogecoin network to receive hashrate from other proof-of-work blockchains running on the same scrypt-algorithm. Merge mining allows miners to contribute computing power to two chains at once and thereby compete for both rewards, without having to split the provided hashrate among the two networks. As a result, miners today can mine both Dogecoin and Litecoin simultaneously.
PROCESS AND REQUIREMENTS
Mining Dogecoin requires the provision of processing power, also known as hashpower, to the Dogecoin network. Because Dogecoin represents an open, permissionless system like Bitcoin, anyone with access to computer-processing power can participate in mining. In the early days of Dogecoin, it was very well possible to mine the cryptocurrency using home CPU and GPU computer hardware. Due to Dogecoin’s surge in popularity, ever more hashpower is being provided to the network, making mining increasingly more difficult. Today, Dogecoin cannot be mined efficiently with a computer processing unit (CPU) anymore. At least a powerful graphic card unit (GPU), or better, a so-called application-specific integrated (ASIC) mining machine, is necessary to provide relevant hashpower to the network.
Just like the Bitcoin mining industry, Dogecoin mining today is dominated by mining pools. If a miner can only provide limited computing power, it is best to connect these mining machines to so-called mining pools. This way, a smaller miner can team up with a lot of other hashpower, making it more probable that they will get a steady flow of block rewards from their mining activities. Whenever the respective mining pool finds a new block, each miner gets a share of the rewards proportional to the hashpower they have contributed. Further, most of these mining pools allow for merged mining, which allows miners to participate in the mining of multiple scrypt-based currencies at once without having to split up their hashrate.
HOW MUCH CAN YOU EARN MINING DOGE?
A miner’s individual profitability depends on four different variables: Energy costs, hashpower provided, the current Dogecoin price, and the block reward. The most important of these parameters is the energy costs, which strongly vary depending on a miner’s geographic location. The other three variables are similar for all miners. Therefore, miners tend to set up their equipment in places where energy costs are comparatively low, making their mining business more profitable.
Looking at the most profitable GPU we see that they make $0.25 – $2 a day, depending on the current Dogecoin price. To amortize the GPU, depending on the exact model, it takes 2 to 3 years. Some newer Nvidia models also provide half the hashrate of previous models, making them on purpose less attractive for mining to ensure availability for other use cases. In summary, we see that buying GPUs for the sole purpose of mining Dogecoin (and Litecoin) at current price levels is rather unattractive. But for someone owing a powerful GPU, it can be a nice way to earn a few extra bucks.
Things look better when mining with the newest model ASIC miners. These make a profit of approximately $10 – $40 a day when mining both Litecoin and Dogecoin simultaneously and take around 1 to 2 years to pay off.
Read the guide: How to Buy Dogecoin
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HOW LONG DOES IT TAKE TO MINE 1 DOGECOIN?
The Dogecoin network pays a block reward of 10,000 DOGE for each block that is added to the blockchain. The block time is one minute, meaning on average every minute one new block, or every day 1,440 blocks are added to the chain.
10,000 DOGE (block reward) x 1,440 (blocks per day) = 14,400,000 DOGE are mined every day.
How long it effectively takes to mine 1 Dogecoin depends on how much hashpower a miner provides to the network. With the newest ASIC mining machines, on average approximately 7 DOGE can be mined every hour per ASIC.
When mining with GPUs, this number is much lower. On average 0.5 to 2 Dogecoins can be mined per GPU per day. Thus, for miners preferring a steady income stream, it is important to join a mining pool when mining with GPUs, as otherwise, it can take years until a solo miner solves a puzzle and receives a block reward.
IS DOGECOIN STILL EASY TO MINE?
Since 2014, Dogecoin can be merged-mined with other scrypt-based blockchains. Thus, its hashrate was strongly dependent on Litecoin miners for several years. This changed with the Dogecoin frenzy in early 2021, when the cryptocurrency became one of the most profitable to mine. Not surprisingly, this attracted many new miners, who wanted to profit from this opportunity. As a result, Dogecoin’s hashrate has strongly increased and even surpassed that of Litecoin.
Today, Dogecoin’s hashrate is approximately half of Ethereum’s. This led to the fact that CPU mining has become highly ineffective. Mining with GPUs is still possible and profitable. Should Dogecoin’s hashrate further increase in the future, then this could change as well. ASIC mining machines will squeeze GPU miners out of the market as they provide hashrate in larger quantities at a cheaper price.
In conclusion, we can summarize: YES, Dogecoin is easy to mine, even with a CPU. But to mine Dogecoin profitably, miners need GPUs, or even better, ASICs.
HOW TO MINE DOGECOIN
Here are a few basic steps you need to follow:
Step 1: Purchase Mining Hardware
Acquire mining hardware or check if your CPU/GPU is suitable for mining. In order to most profitably mine Dogecoin, you need ASIC miners designed for scrypt-based algorithms. These can be purchased from official producers or resellers. It’s not unusual to encounter supply bottlenecks.
Step 2: Install Mining Software/Update Drivers
Step 3: Join a Mining Pool
Join a suitable mining pool by creating an account. Here you can view a list of the top 5 Dogecoin mining pools.
Step 4: Connect Your Devices to the Pool
Step 5: Set up a Dogecoin Wallet
In order to collect any revenue from the block rewards, you need to register your payout address with your pool account. If you don’t have a Dogecoin wallet yet, then now is the time to set up your personal wallet. Dogecoin offers official wallets, but many other wallets provide Dogecoin storage as well.
Step 6: Start Mining
Once everything is set up, your mining pool’s account settings monitor your hashrate, revenue, and payout. Most mining pools provide you with a dashboard or even an app to keep track of your mining activities. Once you have mined some Dogecoin and received your block rewards, you can cash them out to your personal wallet via your mining pool account.