Dogecoin uses the same underlying blockchain as Litecoin, another popular cryptocurrency, albeit with some improvements. As a participant in the infamous cryptocurrency market bubble of 2017, Dogecoin saw its value rise significantly. The altcoin lost most of its momentum after 2018 but still maintains a large following of supporters that trades it in various exchanges.
Many cryptocurrency enthusiasts and investors have started to consider mining Dogecoin instead of Bitcoin. In this guide, we’ll take you through the basics of Dogecoin mining, what you will need for the mining process and the types of mining available.
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Mining in the cryptocurrency context refers to the process of producing cryptocurrencies as a reward for a task that you complete. It is a transactional process involving the use of computer systems and cryptographic processes to solve complex problems. The miner gets rewarded for his/her efforts.
However, the dogecoin mining process differs from that of other cryptocurrencies like Bitcoin and Ethereum. For starters, Dogecoin makes use of the same Scrypt hashing algorithm that Litecoin uses.
Because of their relative similarity, it is even possible to mine Litecoin and Dogecoin together at the same time.
However, when compared to Bitcoin, Dogecoin has some pronounced differences which are highlighted below.
|Points of Difference||Bitcoin||Dogecoin|
|Block Reward||12.5 BTC||10,000 DOGE|
|Block Time||10 mins||1 min|
If we take a closer look at how the mining differs for Dogecoin and Bitcoin, let us further examine the points of difference.
- Reward: Reward refers to the amount of cryptocurrency that miners each block added to the network. While Bitcoin miners earn just 12.5 BTC for their mining efforts, Dogecoin miners earn 10,000 Doge for each block mined. However, there is no reason to rejoice, as Bitcoin’s value dwarfs that of Dogecoin.
- Difficulty: Network Difficulty refers to a number that represents how hard it is to mine a particular cryptocurrency. The mining difficulty of Bitcoin is around 3,511,060,552,899 while Dogecoin is lower at 2,798,252.
- Algorithm: In the cryptocurrency context, algorithms refer to rules that govern the mining of a particular cryptocurrency. Bitcoin uses the SHA-256. Litecoin and Dogecoin are Scrypt coins and both use a proof-of-work consensus algorithm.
- Block time: Block time refers to the time taken by a block to be mined. For Bitcoin, the block time is 10 minutes. But it takes only about a minute for a new Dogecoin block to be mined.
In the Dogecoin blockchain network, a group of transactions within a block consists of data at the time of transaction. The data is then broadcasted to the network to other miners once a block is mined. The records are updated, securing the network against any recording double transaction. The network does not approve any fraudulent transactions.
Like any cryptocurrency mining, Dogecoin mining involves solving some advanced cryptographic equations. A dogecoin miner thus has to spend energy on computing power which leads to expenses.
They are also compensated for their efforts through a transaction fee and block creation reward. The Dogecoin miners are thus responsible for maintaining and updating the Dogecoin network.
Once you have decided to move ahead with Dogecoin mining, the next thing you need to know are the types of mining available, as well as the software and hardware requirements for the whole process.
Before you begin the mining process, you need to figure out what mining equipment you will use. This includes the following:
- Windows OS, Mac OS, or any Linux system
- A mining pool address
- A Dogecoin Wallet (Our suggestion is to go for any hardware wallet like Ledger Nano S , Trezor Model T or Coinbase )
We are using an ASIC miner as an example. This piece of hardware can be a bit costly. However, it’s crucial that you get an ASIC miner if you want to aim at profitability. We will be using the Bitmain Antminer L3++ miner, as it’s one of the cheapest ASIC units available. It consumes less power and provides a good hash rate. For Dogecoin mining software you can go for MultiMiner.
Setting up the Antminer L3++ is easy since there is no need to download and configure any complicated software. Once softwareurchased an ASIC miner, it’s time to get it set up.
Step 1) The first thing you have to do is to connect your ASIC to the power supply unit which in turn should be connected to a power source.
Finally, connect the Ethernet cable into the ASIC.
Step 2) Find your rig on your network.
You can use Advanced IP Scanner, which is a free software. Once downloaded, run it once. It will look something like this. Make sure the IP range matches your local IP range on your DHCP server or router. Go ahead and click Scan.
Step 3) Once the Scan is complete, look for Antminer. Double click it and it will bring up the AntMiner page on your browser.
Step 4) Type in “Root” for both username and password, which will be the default login. After entering both credentials, you will be logged in to your main antminer page.
Step 5) On The next step is to join a mining pool. One of the main deciding factors here would be the hash rate.
You can choose one of the many dogecoin pools available which is show below:
|Pool name||Pool Fee||Hash Power|
Step 6) On the Miner Configuration tab, Enter the addresses of the pools you have selected. Enter your Dogecoin Wallet address where it says “worker”. Once you hit save, you’ll be ready to mine dogecoin.
The presence of ASIC hardware has severely tipped the balance of mining towards anyone using them. Normal GPU’s hence cannot compete with the computational power of ASICs. This is one of the reasons why mining Dogecoin with GPU isn’t financially viable anymore. But if you still move ahead. here are examples of some GPUs you can procure for this purpose:
- ASUS RX VEGA 64
- Nvidia GeForce GTX
- SAPPHIRE Pulse Radeon RX 580
There are certain things you will require to begin the mining process.
- Username for mining pool site
- Worker password
- Worker name
- Stratum address and port number for the connection.
Mining Dogecoin with your computer’s CPU is another option, although it is not financially viable. It is very hard to turn in a profit and you will only end up with an overheated computer.
However if you still want to go ahead with CPU mining, you will need CPU specific mining software like CPU Miner.
There are certain Android apps that can help you mine Dogecoin, like Coin Miner Pro. It’s a lightweight and simple app that allows Dogecoin mining along with a host of other cryptocurrencies. Keep in mind that this app can overheat your android device, depending on its capabilities. There’s n profit potential for this mining method.
Cloud mining is a hand-off approach to mining Dogecoin which lets you buy into a mining operation. You are not required to own anything, instead of renting the hardware from a big data centre. There are specific cloud mining pools that you can join, all of which offer Scrypt-based mining for a monthly fee. Some of the pools you can join Eobot, Genesis Mining and NiceHash.
Cloud mining is ideal for people who do not want to commit to hardware or management required for the mining process. However, the downside is that almost all the contracts are time-locked. This means that the ROI can go down sharply if you take a 1-year contract from a cloud miner and the price of Doge decreases below the cost of your mining and electricity.
You can go for power marketplaces such as Nicehash which still offers Scrypt mining contracts. It’s different from other cloud mining pools as it pairs hashing power with buyers.
There are many sellers offering their hashing power for sale. However, most cloud mining pools don’t share much information about their company and it can be hard to work out whether a contract is worth it or not.
Dogecoin mining isn’t an investment choice that can make you an overnight millionaire. Therefore, it is not a good idea to go for solo mining, since the cost of electricity and hardware will far outweigh whatever profits you will earn.
Additionally, Dogecoin’s small value compared to other cryptocurrencies can seriously decrease profits even if you choose to pool mine dogecoin.
To calculate profit from dogecoin pool mining, you need to use a dogecoin mining calculator. You can use the calculator provided by Whattomine.
The site provides updated information on the block reward, exchange rate, network difficulty, and dogecoin’s current price. All you have to do is enter your hash rate, power, cost, mining pool fees and hardware cost and the calculator will generate results.
Note, that the final results may vary as the calculations are based on mean values.
Dogecoin does not have a hard cap on total coins that can be created, which makes them different from most other cryptocurrency models.
- The biggest advantage of Dogecoin mining is the relatively less amount of computational power that one would require in comparison to Bitcoin mining.
- This means that a larger number of entities can join as dogecoin miners.
- The current reward for mining dogecoin is 10,000 DOGE, which was last updated in February 2018.
- DOGE follows an inflationary model and has a 5% inflation rate.
- The average block time of dogecoin is set at 1-minute intervals to support rapid confirmations of transactions.
- Buying options for Dogecoin are also limited, further decreasing the importance of mining Dogecoin.
❓ What are the types of Dogecoin Mining?
Depending on the type of processes and hardware used, there are several different ways you can mine Dogecoin. We will now cover each of them briefly.
- CPU Mining: CPU mining utilizes the miner’s central processing unit for mining Dogecoin. It used to be a viable option almost 5 to 6 years ago. However, it is declined in popularity due to dwindling profits. It is an extremely slow process to go on for several months without earning any significant gains. All one needs to start CPU mining is just a computer and some software programs.
- GPU Mining: This is probably the most popular method of mining cryptocurrencies. Miners use one or several graphics processing units to mine Dogecoin. It’s both relatively cheap and efficient to build a mining rig comprising of GPUs. A standard Dogecoin mining rig consists of a motherboard, a processor, and a rig frame that houses the graphics cards.
- ASIC Mining: ASIC stands for Application-Specific Integrated Circuits, which refer to specific devices that perform crypto mining. Compared to the above methods, ASIC mining can produce a lot of DOGE because of its higher computational/processing power. Normally companies who announce a new version of their ASIC miners are flaked with criticism from the crypto community. Since ASIC miners have more computational power than other miners, there is a fear that they rob other miners of equal opportunities. The miners who use CPUs and GPUs cannot keep up with ASIC miners in hash speeds and earnings. There are reports that ASIC miners have influenced various cryptocurrencies’ economies by investing in ASIC farms. However, the list of cryptocurrencies does not include Ethereum.
- Cloud mining: Cloud mining is arguably one of the best ways to mine Dogecoin alongside pool mining. It’s a process where miners pay an entity (normally a big company) to rent out their mining rigs. This is usually fixed in an agreement where all the earnings the rig makes, get transferred to the miner’s crypto wallet. Cloud mining sites and services usually have large mining facilities consisting of several mining rigs. Using this combined computational value, they can offer mining services on a large scale better than others. Individuals who do not have sufficient money to invest in mining rigs themselves can avail this service for mining cryptocurrency. However, one disadvantage related to cloud mining is that you have to pay the money upfront means that you will not get your money back if the price of DOGE drops. You also will not be able to change the hardware and software provided by the cloud mining company.
- Solo Mining: Mining alone or solo mining seems to be the most plausible method of mining. But the degree of competition is high because of the number of participants involved in the network. This is only a profitable method if you have enough resources to have a big presence in the network. For instance, if you have more than a hundred GPUs as part of a mining farm. However, there are a lot of disadvantages related to maintaining a mining farm. They can be plagued with heating and ventilation issues. Maintaining multiple mining rigs also means that you have to spend a lot on electricity, especially if you want to install more than 10 graphics cards.
- Pool mining (recommended): Dogecoin can also be mined using mining pools. A joint group of cryptocurrency miners combines their computational resources into a mining pool. This strengthens their probability of finding a block, leading to more profits. The participants in the pool receive a reward for finding a block, in this case, DOGE. You always have the choice of either going solo with your dedicated servers or join a mining pool along with other miners to combine your hashing output. For instance, combining 6 mining devices in a pool can offer 335 mega hashes per second can generate 2 Giga hashes of mining power.
Also Read: How to Buy Dogecoin
⚡ Which mining method is best for you?
The decision you make will be based on key factors, such as whether you are willing to own a mining rig, or how much you intend to initially invest. Particularly, it will also depend on the following factors:
- The amount you want to invest.
- Whether you want to mine with a rig or not
- If so, what rig do you own?
Cloud mining and GPU mining are popular methods of mining Dogecoin. ASIC mining is unpredictable nowadays, while it isn’t financially viable to mine using a CPU.
However, one of the best ways that experts believe one can mine Dogecoin is through an Dogecoin mining pool. Pool mining Dogecoin allows you to lower the volatility of your payouts. This is done by offering you smaller but more frequent payouts instead of a lump sum amount that you receive only after a block has been solved. Always try to choose a mining pool that provides you with the lowest fees and reliable terms.
🏅 What is Different between Solo vs. Pool mining?
Here is a difference between Solo and Pool mining:
|Parameters||Solo Mining||Pool Mining|
|Definition||Solo mining is mining process when a miner performs all mining operations without joining a pool and using his/her own resources.||Pool mining refers to a process where several miners join forces to combine their hashing power to add blocks.|
|Competition||The level of competition is very high due to the presence of a lot of hashing power already in the network, including ASICs.||By pool mining, you are merging your mining capabilities with that of other miners, which will provide you with the ability to compete against larger mining operations.|
|Profitability||This process is normally exceedingly difficult to profit from at a small scale and is best suited for larger operations such as mining farms. Individually, this process isn’t profitable.||This is a better approach for beginner miner, especially if they want a better return on their investment. The rewards are then split between the members of the pool after each Pool confirmation.|
🚀 Why are Dogecoin Miners Important?
Before the advent of blockchain and cryptocurrencies, digital coins were plagued by what is known as “double spending”. This is how coins got duplicated. The process can be compared with sending a file to someone using your computer.
When you send the file, you are essentially making a copy of the file and sending it to the recipient. The ideal thing to do would be to cut the file before sending it.
When we apply the same principle to digital coins, you send the appropriate funds in cryptocurrency to the recipient which is promptly reflected in your balance as well as the receiver’s balance. However, some individuals may not be so sincere and simply copy the desired amount of coins for himself before sending, thus creating a copy. This is known as double-spending.
Distributed ledger technology ensures that all ledgers are instantly updated once you send coins to someone else. This means it will correctly show the coins decreasing in the sender’s wallet and increasing in the receiver’s. This has solved the problem of double-spending.
Dogecoin and other blockchain networks consist of groups of transactions in a block carrying data on the time of the transaction. Once a block mining has been complete, the data is sent to other miners on the network who update their records.
Thus, miners play a crucial role in securing the network against transaction duplication as any fraudulent transactions do not get approved.
Dogecoin holds the distinction of being one of the first altcoins to get popular. Mining Dogecoin may not be as profitable as mining other cryptocurrencies, but it is a fun way for many to gain some experience in mining and help the growing DOGE community.