While Dogecoin may have its origins as a joke currency, but the process of mining it is very real. A mining pool is one way of mining a proof-of-work (PoW) cryptocurrency like Dogecoin. (The other way is solo mining in which an individual tries to solve for a block on their own, using significant time and computing power.)
A mining pool is a collection of miners who pool their resources and share the rewards. Individual miners receive a portion of block rewards in proportion to how much hashing power they contributed.
Miners may earn less overall when mining in a pool. But they receive rewards on a more consistent basis and can maintain a profitable operation even with smaller amounts of computing power.
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Before moving on to the subject of Dogecoin mining pools, let’s take a quick look at how Dogecoin mining works:
How Does Dogecoin Mining Work?
Dogecoin mining works in much the same way that mining any other proof-of-work cryptocurrency works. Dogecoin is based off of Litecoin, which forked from the original Bitcoin source code.
The main difference between Bitcoin (BTC) and Dogecoin (DOGE) or Litecoin (LTC) is that the latter two are altcoins that use a mining algorithm known as Scrypt. Bitcoin mining, by contrast, uses an algorithm called SHA-256. Scrypt allows for faster block confirmation times, which means faster transaction times.
Here’s a quick, simplified rundown on crypto basics and how the mining process works.
• A blockchain is a type of distributed ledger technology (DLT).
• Blockchain networks are the highways on which cryptocurrencies travel.
• The computers that maintain a blockchain network are called “nodes.”
• Some nodes can add new blocks of transactions to the network. These nodes are called “miners.”
• Miners solve complex mathematical problems to process transactions and achieve consensus on the network, ensuring everyone agrees which transactions are valid.
Like gold mining, mining for crypto requires time and energy, whether you’re mining Bitcoin or an altcoin like Dogecoin. But unlike gold mining, computers do all the work in crypto mining. Individuals only have to set everything up and monitor the process. For some, mining cryptocurrency offers an opportunity to obtain cryptocurrency without buying it on an exchange.
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How Do You Mine Pool Dogecoin?
To participate in a Dogecoin mining pool, you must have all the necessary hardware and software listed below.
Using a pool only involves one extra step: telling the miners where to “point” their hashing power. This typically involves entering a single line of computer code into the mining software. The mining pool will provide the specific command, likely somewhere on its website or in the software itself.
Dogecoin Mining Equipment
Crypto mining requires sophisticated and powerful computers known as Application-Specific Integrated Circuits (ASICs). In the case of Dogecoin mining hardware, the ASIC must be specifically designed to run the Scrypt algorithm.
While there might be some pools that allow users to use SHA-256 ASICs, contribute that hashing power to the pool, and take rewards in DOGE, those interested in mining DOGE specifically should stick to Scrypt ASICs.
ASICs take so much electricity that even smaller miners usually require a special power supply to connect to an electrical outlet. They also generate considerable heat, and miners must keep them cool to prevent damage.
In addition to the ASICs and their power supplies, miners will need a laptop or desktop computer. Running the Dogecoin mining software can take a considerable amount of central processing unit (CPU) or graphic processing unit (GPU) power, so that computer probably won’t be able to do much else while the mining is happening.
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How to Join a Dogecoin Mining Pool
Most mining pools don’t have any special requirements for joining. They want to make it as easy as possible for new miners to contribute because they take a small fee from each block reward. The more miners in the pool, the more often the pool finds new blocks, and the more fees the pool will generate.
Mining pools often have instructions on their website that teach new miners how to join. It usually involves little more than entering a line of code into a mining program. Computers handle the rest.
Here is a rundown of the steps that an individual will take when joining a mining pool:
• Selecting a Dogecoin mining pool to join (more on this in the next section).
• Downloading and installing the software from the pool’s official site.
• Creating a DOGE wallet and entering the address into the software (so the software knows where to send the new coins.
• Obtaining the necessary hardware.
• Using a mining profitability calculator to estimate how profitable mining might be, based on variables such as electricity costs, hashing power, and mining difficulty.
• Each of these steps involves its own set of issues that need to be addressed.
How to Find the Best Dogecoin Mining Pool
To choose the best Dogecoin mining pool for you, consider the following factors:
• The fees charged by the pool.
• How the pool calculates and distributes rewards.
• The location of main servers.
• The total hashing power of the pool.
Because mining cryptocurrency comes with a significant investment of time and money, miners will want to choose a pool that earns them the greatest profit. That involves a pool with the lowest fees and most equitable reward structure. The biggest Dogecoin pool may or may not be the best, as there are other factors to consider.
Some mining pools mine multiple cryptocurrencies. This allows the pool to switch its mining activities should mining a different coin become more popular depending on the constantly changing variables of price and difficulty.
For example, some pools mine both Dogecoin and Litecoin since both rely on the same mining algorithm. If such a pool’s miners were focused on Dogecoin but the price of DOGE stagnates, it could become harder to mine DOGE due to difficulty increases, meaning reduced profits for miners absent a rise in DOGE. Then they could switch to Litecoin.
The Dogecoin mining pool power cost is also important to consider. Mining requires cheap electricity to be profitable. Many people turn to renewable energy sources like solar power for this reason, which also benefits the environment.
Cryptocurrency mining is not an easy task and won’t be profitable for most people most of the time. All the right variables must align for an individual to make money mining in most instances. Many take up mining as a hobby and as a way to build a small crypto portfolio while contributing to the livelihood of the network of a particular coin.
If you’re interested in building a crypto portfolio without getting involved in mining, opening a brokerage account on the SoFi Invest investment app is a great way to get started. SoFi members can trade crypto directly from the app, with the peace of mind of knowing that they’re keeping their holdings on a secure platform.
Photo credit: iStock/Thirawatana Phaisalratana
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