After the price gains that Dogecoin (DOGE) has seen over the past year, the cryptocurrency has drawn interest from traders, investors, and those who want to mine it. Mining DOGE requires less computing power than some other crypto currencies, like Bitcoin.
Here’s what you need to know about mining Dogecoin:
Basics of Crypto Mining
Here’s a quick, simplified rundown on crypto basics and how the mining process works.
• Blockchain networks are the highways on which cryptocurrencies travel.
• A blockchain is a type of distributed ledger technology (DLT).
• The computers, called “nodes,” maintain the blockchain network.
• Some nodes, called “miners,” can add new blocks of transactions to the network.
• Miners solve complex mathematical problems to process transactions and achieve consensus on the network, ensuring everyone agrees on the validity of transactions.
Mining crypto is like mining for gold in that the process requires time, equipment, and energy. But unlike gold mining, computers do all the work in crypto mining.
A Brief History of Dogecoin
Developers Billy Marcus and Jackson Palmer launched Dogecoin as a fun way for people to learn about cryptocurrency. The meme coin traded at a price of a tiny fraction of a penny, so people could send it to each other for fun while learning how to use crypto wallets.
Dogecoin began in 2014 as a joke. Based on a famous meme of a Shiba Inu dog with grammatically incorrect phrases surrounding it like “much style,” “very fashion,” or simply “wow,” DOGE had almost no real value for several years.
In 2018, the altcoin reached more than $0.01 as cryptocurrency began to go mainstream for the first time. The price of DOGE then crashed and stagnated for several years. Then, in 2021, Dogecoin reached record highs around $0.70 before crashing down to about $0.24 at the time of writing.
What is Dogecoin Mining?
Mining Dogecoin involves running powerful computers known as nodes that process transactions for the network. In exchange for this work, miners receive block rewards of newly minted DOGE.
A new block of transactions is mined approximately every minute on the Dogecoin network. The block reward is 10,000 DOGE, or about $2,000 currently. Unlike Bitcoin, which releases fewer coins over time, there is no limit on how many Dogecoin miners can ultimately find.
How to Start Mining Dogecoin
There are several things you’ll want to consider before you begin mining Dogecoin.
Requirements Before You Get Started
The requirements before getting started include:
• Basic personal computer knowledge
• Familiarity with cryptocurrency wallets
• A reliable source of electricity
• A desktop or laptop computer with Windows, Mac OSx, or Linux
• A DOGE wallet
Running mining software can take a lot of CPU power, so the computer being used for the job probably won’t be much good for anything else while the miners are up and running.
Both the miners and the computer running them will need to be plugged in almost 24/7 for maximum profits. Miners can also generate substantial amounts of heat. This is something worth keeping in mind, as you may need additional fans or other cooling equipment.
Solo vs Pool: Dogecoin Mining
Miners will need to decide whether they want to mine solo or with a pool. The benefit of mining solo is that 100% of the block reward will go directly to you. But it could be weeks or months before you find a block because there is so much competition.
Most miners choose to join a mining pool. Pool miners receive rewards in proportion to the amount of hashing power they contribute. However, they also have to pay a small fee in exchange for using the pool.
Those who are new to mining might find using a pool to be the best option.
Dogecoin Mining Hardware
While it could be possible to mine DOGE with your computer’s CPU, it could damage the device due to overheating and might not be very profitable.
Instead, you might consider either a GPU (graphic processing unit) or a Scrypt ASICs (application-specific integrated circuits), which is a device specifically created to mine cryptocurrency.
The prices of these types of hardware vary, but a low-end GPU might cost around $400. Scrypt ASICs, which are used to mine Scrypt-based coins like Litecoin and Dogecoin, can cost anywhere from $700 to $17,000 or more.
A single desktop or laptop computer can run numerous mining machines.
Dogecoin Mining Software
Once you’ve chosen a mining pool, and obtained the necessary hardware, the final step in mining Dogecoin is setting up the appropriate software.
Make sure the mining software is compatible with the mining hardware you’ve chosen.
Once you’ve connected your hardware to the computer that will run the software, you connect the pool with your crypto wallet, where it will deposit your Dogecoins. The pool owners and software developers have instructions for that on their websites.
Some mining software options include programs like CudaMiner, CGMiner, or EasyMiner. CudaMiner is only for GPUs while CGMiner and EasyMiner work with either GPUs or ASICs.
Dogecoin Cloud Mining
If you opt to mine through the cloud, you won’t need physical hardware or software. This mining option simply involves buying a contract for a certain amount of hashing power over a certain amount of time. In essence, you’re renting computing power from someone else.
Be careful though, there have been many cloud mining scams over the years.
Recommended: What is Bitcoin Cloud Mining?
Is Dogecoin Mining Worth It?
Mining Dogecoin may or may not be worth it depending on several factors.
The most important variable in any mining profitability equation is the cost of electricity. Having access to low-cost electricity can make mining much more profitable. Renewable energy sources like solar and hydroelectric are popular among miners for this reason.
If figuring out how to mine Dogecoin, acquiring the needed hardware, and accessing affordable electricity don’t seem like difficult hurdles to conquer, then Dogecoin mining could be worth it.
The other big factor is, of course, the price of DOGE in relation to a miner’s local fiat currency or in relation to Bitcoin (when Bitcoin goes up or down, many altcoins tend to follow).
Dogecoin mining could also be an interesting way to learn about cryptocurrency mining in general. Using smaller miners that don’t take much electricity, you might choose to mine some DOGE for the learning experience. This is commonly referred to as “hobby mining.” Hobby mining generally isn’t profitable unless the coin being mined happens to see a huge price spike at just the right time.
Recommended: Is Crypto Mining Still Profitable in 2021?
How to Sell Your Mined Dogecoin
Unless you’re planning to HODL your Dogecoin, you’ll likely want to sell you DOGE after you’ve mined it. Selling DOGE requires using a crypto exchange. You can choose from a number of centralized or decentralized exchanges.
After getting set up on an exchange, find the public key address (also known as a deposit address) for your DOGE wallet. This is the address you will need to send the mined Dogecoins to in order to sell them.
Once the coins have arrived on the exchange, you can trade them for the currency of your choice. That could be U.S. dollars, a stablecoin like USDC, or Bitcoin, for example.
You don’t have to be a tech genius to mine Dogecoin. But having some previous experience with computers and crypto will be an advantage. The process also requires a substantial investment required in terms of time and money to get started.
There’s an easier way to acquire Dogecoin. Simply buying cryptocurrency that has already been mined can be faster and cheaper than mining. An easy way to do that is via the SoFi Invest® crypto trading platform, where users can trade Dogecoin and several other popular cryptocurrencies.
Photo credit: iStock/Aleksandr Zotov
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