First started as an internet meme from 2 software engineers Billy Markus and Jackson Palmer to mock crazy fans of cryptocurrency, Dogecoin has now officially become a part of the big family. It’s actually one of the top crypto currencies at the moment – not bad for something that started out as a joke.
Just like other cryptocurrencies, Dogecoin is powered by a decentralized finance system called blockchain technology. The attraction of cryptos is that it is not under any private corporations, multinational enterprises or the government’s control. Crypto currencies are free from any regulations set by any government and bank institutions.
Moreover, Dogecoin cannot be found in a single particular computer system. It is built on top of a huge network of computers or nodes that confirm the transactions. This system of peer-to-peer exchange and transfer of information makes the whole structure almost impossible to hack and bring down.
Cryptocurrency has limited supply, hence the hype. This limit of supply is meant to make sure that their prices will not get too low, which is what happens for fiat currency like the USD if the government keeps on printing the money without proper control or monitoring.
There are market caps for each cryptocurrency. Dogecoin has no supply limit, of which around 129 billion Dogecoins are currently circulating as of May 9, 2021.
What is Dogecoin mining?
Before we get to Dogecoin mining, you have to know that mining cryptocurrencies is not the same as mining coal or petroleum underground like they do in the Middle East. The mining being discussed here is digital mining through complex mathematical algorithms. In a simpler context, it is like the process of creating a new coin by solving a puzzle, but just in a more technical way involving very complex algorithms .
Since the ledger — blockchain technology — of the transactions need to be maintained, not a lot of people will spend time mining. Instead, they will just buy the coins outright from the crypto markets. .
In the early days of crypto, it was possible to use your own laptop pc to solve any of the blocks in the chain and earn yourself a coin for your efforts. Each confirmation of a transaction will place a new block for the Doge network, for which there will be a reward for the miners in the form of more Dogecoins.
Every cryptocurrency has different mining systems. Here is a comparison of Dogecoins and Bitcoin, the leading cryptocurrency in the world.
- Algorithm: Rules for mining new currency aka hashing algorithm
- Block time: Average time for a new block checked and added to the chain. It varies across time.
- Difficulty: Difficulty level to mine a new block of currency. It varies across time.
- Reward: Amount of new currency rewarded for each new block mined. It varies across time.
How to mine Dogecoin?
There are 3 ways to mine Dogecoin: solo mining, pool mining and cloud mining. We’ll explain one by one to see what the difference is between them.
- Solo mining
You are mining on your own. It means you need to spend more money on the most modern and updated equipment and pricey utility fees by yourself. However you get to keep all the rewards to yourself .
In some cases, people have spent a whopping $500,000 for just building the mining gear alone. This is not including the electricity bills that are usually enormous for an operation of that size. If you’re not careful, the electricity bills could eat into your profits without you realizing.
- Pool mining
It’s like a group project. You have less work to do but you need to share the pride and achievement. At Dogecoin mining, you will have an easier time earning coins, but the rewards have to be shared.
Before joining a pool, check out their calculation for the payouts of each member and consider the extra pool fees needed. There are few options online for pool mining. So do research about all of the options before you join the pool.
- Cloud mining
Pay for a group to mine for you. This is for those that prefer not to invest too much effort and time for mining Dogecoin. You can rent machines from a data center and ask them to mine for your behalf. This way might be the most costliest among the 3 options, since it is time-locked and the price might drop during the agreement. Furthermore, electricity bills and other costs need to be covered too.
Things needed to mine Dogecoin
Other than the electricity itself, there are 3 things needed to mine Dogecoin which are hardware, software and a crypto wallet.
Any Windows, Mac OS or Linux system is needed to start mining. Basic machines like CPU can be used but it will take a long time to succeed. Also, your computer will end up overheated or getting damaged.
GPU mining is recommended, especially those with graphic cards. Alternatively, you also can use Scrypt ASIC miner which is dedicated mainly for crypto like Dogecoin.
The software will differ depending on the hardware you use. Here are the softwares recommended for different hardwares:
- CPU: CPUminer
- GPU: EasyMiner, CGminer, CudaMiner
- Scrypt ASIC: MultiMiner
Be careful to select the legit mining software, or else the fake ones will harm your PC and investment. So double check before downloading.
- Crypto wallet
Digital wallet is not enough to secure your Dogecoin if you are serious about mining it. Since you have invested so much in this process, why not secure it further by having a cold crypto wallet?
You don’t have to worry about being hacked and keep your profits safe.
We don’t know whether Dogecoin will go up in price again or plummet to oblivion. Will Elon Musk put more trust in it or is it just for clout? That’s up to you to discover.
However when mining Dogecoin, one should always balance the costs to run the mine and the potential returns before deciding whether it is a good option.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.