How to Mine Dogecoin - Step-by-Step Guide
Mining is how a Proof of Work cryptocurrency network allows for new coins to come into circulation. To make it work, several computers called miners compete to solve a computational puzzle, which entails verifying transactions in a new block and adding them to the main chain. For their effort, miners earn a reward in the form of new coins.
The mining process is critical to maintaining network security and enhances decentralisation, key aspects of blockchain technology. But crypto mining is becoming competitive as more people look to join the venture. In this article, we explain how to mine Dogecoin profitably.
Our Quick Guide to Mine Dogecoin
Set up a Dogecoin wallet
The first step to mining Dogecoin is to set up a wallet, which is where you'll receive the mining reward. Find a secure wallet, preferably hardware wallets that allow you to keep your crypto keys offline. If not, then a highly secure software wallet will do.
Join a Mining Pool
To mine Dogecoin profitably, you need the right equipment and then join a mining pool. The reason this is important is that you may not mine any blocks if you go solo given the increased difficulty and hash rate needs. A pool allows you to use the power of many to easily accomplish the goal of earning a profit.
Once you have the mining set up ready, it's time to start mining Dogecoin. However, before you begin, ensure that everything is properly configured to avoid potential setbacks along the way. For the hardware, check things like backup power and cooling system. Ensure that it's legal to mine crypto in your country.
Requirements – What do You Need to Start Mining Dogecoin Today?
To start mining DOGE right away, you need to have set up your Dogecoin wallet, have the right hardware and software or buy a cloud mining contract. Read below for simple steps that could see you mining one of the phenomenal coins of 2021 which became popular after Elon Musk tweeted about it.
Popular Hardware and Mining Rigs for Dogecoin
Mining most of the popular digital currencies has moved from the use of CPUs, and that too applies to Dogecoin. You can mine DOGE using a GPU mining rig. However, the most popular hardware to mine Dogecoin today is an Application Specific Integrated Circuit (ASIC) device.
The underlying dynamic in mining, whether it's Dogecoin's Scrypt or another algorithm, is that hardware devices or rigs that pack the most computing power have the greatest chance of mining the next block and getting the reward.
As this is getting more and more defined with DOGE's increased popularity, getting an ASIC with a good enough hash rate is the first step. Of course, your profitability will largely still depend on other factors including electricity consumption, efficiency, and the Dogecoin price.
You can purchase a Dogecoin miner from the manufacturer or any of the several outlets in the market. Remember to do due diligence before buying the rig, including how long it might take before you get a return on investment (ROI).
Here are three top ASIC miners for Dogecoin.
1. Bitmain Antminer L3+
Bitmain Antimimer L3+. Image Source: ASICMiner Value
The Antiminer L3+ is an ASIC miner from global mining hardware giant Bitmain. The miner comes with a decent hash rate of 504MH/s at a power consumption of 800W and an efficiency of 1.6J/MH at the wall. You can mine DOGE with this miner, as well as several other Scrypt-based cryptocurrencies, including Litecoin.
2. BW L21 Scrypt Miner
BW L21 Scrypt Miner. Image Source: ASICMiner Value
The BW L21 is a January 2018 release by BW.com. This Scrypt ASIC Miner offers 550 MH/s with a power consumption of 950W and output efficiency of 1.727j/Mh. This is one of the most powerful ASIC miners for Dogecoin.
3. FusionSilicon X6 Miner
X6 Miner. Image Source: ASICMiner Value
The X6 Miner is an ASIC miner from FusionSilicon released in August 2018. It supports the Scrypt algorithm and thus is great for Dogecoin among other Scrypt-based coins. X6 Miner has a hash rate of 860Mh/s, power consumption of 1079W, and efficiency of 1.255j/Mh.
Before you start to mine crypto, you need software integration with your hardware. If you decide to mine with an ASIC, then you might find it pre-installed with mining software. However, in case you assemble or acquire a GPU mining rig, you need to download and install the software.
You should ensure that you use the software that fits best with the type of mining hardware you have. Note also that there are desktop and mobile versions. With the former, you have it on your desktop device and can only access it on that device, while a mobile version allows you to mine on the go.
Which software people use to mine Dogecoin
The most popular mining software you can check out is CGMiner. The CGMiner v3.7.2 is a command-line interface (CLI) software product that you can easily install and customise to your settings. You can also check out MultiMiner and EasyMiner for ASIC hardware and CudaMiner for GPU mining hardware.
Can I Use my Personal Computer to Mine Dogecoin?
Technically, this is something you could try as Dogecoin mining needed relatively less computing power before the price explosion put it on the map and attracted more hashrate and thus increased difficulty.
Today, mining Dogecoin with your PC is not a venture you are likely to undertake if you seriously want to make money from it. The simple reason, as noted above, is that you need a lot more computing power than what your CPU can handle.
Again, if you do try, your computer will quickly overheat and likely get damaged. As such, you can only use GPUs or ASICs, and even with the former, you might need a rig comprising 4 or more top graphics cards from top brands.
Technical Knowledge Required to Mine Dogecoin
As you prepare to begin mining Dogecoin, you may need to understand a few technical terms that apply to the industry. The know-how will help you make sense of the whole idea of mining.
- Algorithm: A set of rules that allows for mining, which entails security of the transactions and blockchain. Mining algorithms vary and it's good to know which applies to the coin you want to mine.
- Blockchain: In simple terms, a blockchain refers to the series of data blocks added one after the other on a distributed ledger. The blocks have to be valid and contain hashes of all the transaction data. Miners only get their reward once a block is verified and added to the ledger.
- Hash rate: This is the amount of computing power needed to mine new coins. The more the hash rate, the higher the chances of getting a block. Hash rate is also the total computing power from all the miners securing the network. The higher the hash rate, the more difficult it is to execute a 51% attack.
- Block time: This refers to the time it takes a miner to find a new block, verify transactions and add it to the blockchain. It's also called block generation time. Dogecoin has a 1 minute block time, while Litecoin is 2.5 minutes and Bitcoin's is 10 minutes.
- Mining difficulty: This is a measure of how hard it is for miners to get a new block. It often increases or decreases depending on the number of miners on the network. Difficulty adjustment ensures the average block time remains around the coded duration.
- Mining fees: This is a small fee a user pays to have their transactions processed on the network. It forms part of a miner's block reward.
- Block reward: This is the prize each miner or pool gets for every block they mine and add to the blockchain. It includes the new coins (10,000 DOGE) and transaction/mining fees.
- Mining profitability: This is the calculation of potential returns when all costs of mining have been taken into account. Miners become profitable when the price of mined coins exceeds the overall cost of mining.
Joining a Dogecoin Mining Pool
Other than solo or self-mining, you have the option of joining a Dogecoin mining pool. Mining pools combine or bring together many miners, "pooling" the hashing power to mine as a single unit. In this way, miners can compete against big farms for the block reward.
A mining pool will reduce the time it would take you to mine a single block, which means, you are likely to turn profitable faster with a pool than as a private miner on a limited budget.
The mining pool you join needs to support Dogecoin's Scrypt algorithm. While you check these out, here are two of the most popular for this cryptocurrency:
- Prohashing: It supports Scrypt, X11, Equihash, and SHA-256 and pays in DOGE, not USD so you have the coin and can "hodl".
- Multipool: Here you can do merged mining of DOGE and Litecoin.
Mining Dogecoin on the cloud is another option you can consider. Cloud mining allows you to start mining simply by renting hashing power from one of the data centres.
It's hands-free mining and doesn't require you to have any hardware or commit time to monitor the equipment. All you do is buy a mining contract, usually on a monthly or yearly basis and pay the fees. The data centre will use its hash rate to mine Dogecoin and pay you a share of the reward.
To start cloud mining Dogecoin, set up a wallet and find a reputable mining pool that offers cloud contracts. Nice Hash and Genesis Mining are the two top choices for Scrypt-based coins.
Pros and cons of cloud mining
- Cheaper than hardware setups.
- Passive mining.
- No need to master technical aspects and terms.
- You can mine any coin.
- Steady share of the reward.
- Risk of shady contracts.
- Contract locked with a fixed fee, even if the price falls during the contract.
How Profitable is Mining Dogecoin?
When Jackson Palmer and Billy Markus developed Dogecoin, they intended it as a 'joke.' They even had the cryptocurrency's logo as a Shiba Inu dog, even looking to discourage serious miners by making the mining reward a random figure. This part meant that a miner could earn anything from zero (0) to thousands of DOGE per block.
But that has since changed, with the increased use of Dogecoin making it a worthwhile coin to mine.
Whether you do self-mining or join a mining pool, you need to first calculate the coin's potential profitability before proceeding. From this, the important thing is to keep mining expenses below the total costs of mining.
Here is what you need to have to get this important step sorted:
- Cost of miner
- Hash rate value
- Electricity cost per kWh
- Pool fees
- Dogecoin price
If you access a good Dogecoin mining calculator, you can easily and quickly check out the mining profitability of various hardware devices. Most mining calculators also have a list of the top hardware machines, so you can sift through as many as possible, focusing on the hash rate value, power usage and efficiency.
Let's assume you are looking at a Scrypt miner that costs $209, has a hash rate of 540MH/s and consumes 800W at $0.05kWh.
If the mining difficulty is 2,818,632.16, you pay a 1% pool fee and earn 10,000.00 DOGE as block reward at a time Dogecoin price is $0.0566, then this is how profitable you can be.
Daily revenue would be $2.20 and once you deduct daily costs, the profit would come down to around $1.22.
At this rate, you'd hit ROI in 171 days mining solo. But finding a block, with this hash rate, would take 238 days. So your best bet is to join a mining pool and receive the payout share, with big pools likely to solve a block every day.
I've Already Mined Dogecoin, What Now?
Now, you need to decide whether you'll sell the DOGE immediately or secure them in a wallet and hold them as a long-term investment. Let's explain these decisions.
This would likely be your first decision as you look to get immediate profits. If so, then consider two ways of selling the mined DOGE.
- Via a cryptocurrency exchange: Selling DOGE on a crypto exchange is the easiest way and only needs you to create an account to proceed. Once set, you can sell at any time but beware of additional costs in fees as well as price fluctuations.
- Via a peer-to-peer platform: A P2P marketplace is also another option to sell your coins. On these platforms, sellers connect directly with buyers and negotiate transaction terms. After you agree, you get the payment and then send the DOGE to the buyer's wallet address.
Saving Dogecoin Coins in a Secure Wallet for the Long Run
If you wish to hold onto the mined coins, then a popular strategy in crypto circles known as 'hodling' would suit you.
It simply means holding the coin's long-term, with the conviction that the coin is currently undervalued. If you decide to 'hodl', then ensure you store the DOGE in a secure wallet, the best of which we have listed below:
Frequently Asked Questions
You need a wallet, mining equipment, electricity and an internet connection. With these in place, you can start mining right away.
Yes, you can mine Dogecoin using a GPU miner, with the graphics cards able to work with Windows, Mac or Linux operating systems.
Dogecoin has no supply limit, which means there is no limit to how many DOGE coins can ever be mined. Initially, the creators of DOGE had put a cap of 100 billion but that was changed in 2015 and currently, the circulating supply for Dogecoin has reached 128 billion coins.
10,000 DOGE. Miners receive 10,000 coins as the block subsidy and any transaction fees within the block.
Dogecoin has a block interval of 1 minute, which is how long it takes for miners to find a block.
Pool mining is the best option for a beginner miner as it allows for collaborative mining. This is a faster way of getting a block reward than self-mining because, in a pool, miners combine their hashing power and can compete against other miners more favourably.