The rise of Dogecoin last year brought a massive influx of miners to its network. But how simple is dogecoin mining, what are the requirements, and is it profitable?
Since its humble origins as a parody cryptocurrency focused on a popular online meme of a Shiba Inu “doge,” Dogecoin has gone a long way. Software developers Jackson Palmer and Billy Markus originally intended for their spoof project to be “as stupid as possible,” but it has now evolved into a top fifteen cryptocurrency asset with a $22 billion market cap and a large following worldwide.
Elon Musk, CEO of Tesla, relentlessly promoted Dogecoin during its meteoric climb in the first half of 2021, which unsurprisingly rekindled major interest in mining and increased mining profitability to a new six-year high.
Despite its recent success, dogecoin mining is still much less competitive than bitcoin mining (but still difficult). Additionally, new blocks are found significantly more quickly, and the coin payouts are much bigger (10,000 DOGE vs. 6.25 BTC) every block.
How does mining for dogecoin work
The blockchain network of Dogecoin uses the same technology as that of bitcoin, litecoin, and many other cryptocurrencies to add new blocks to its decentralized ledger and gain consensus among its users.
A “Proof-of-Work” (PoW) technique, it entails “mining,” where people or groups compete for the opportunity to use specialized computer hardware to add new blocks containing pending transactions to the blockchain ledger.
More specifically, miners use their equipment to try to generate a fixed-length code called a “hash” (also known as the “target hash”) with a value that is equal to or lower than the target value of the new block. Whoever writes the winning code receives newly created coins as well as the unique right to add new transaction data to the following block in the chain.
Since every hash is produced at random, it is just a matter of trying different strategies until one miner succeeds.
Dogecoin mining techniques
Due to the network’s early lack of users, mining dogecoin was significantly simpler in the beginning. This indicated that anyone may mine the coin on their own. However, when demand for DOGE grew, mining got more challenging, forcing miners to band together and create “mining pools.”
A mining pool is a collection of independent miners who pool their processing resources to mine the cryptocurrency as a single entity, or node. Following that, the rewards are divided among pool members proportionally to the amount of computing power that each miner contributed.
There are now three major methods for mining dogecoin:
solitary mining/individual mining
pools for mining dogecoin
mining the cloud
Bitcoin Doge cloud mining
Cloud mining, which is not actually mining in the traditional sense, is another way to earn Dogecoin. In essence, cloud mining is renting computing capacity from a data center and paying a monthly or annual price in accordance with a pre-set contract. Depending on how much computer power you purchase, the chosen coin is subsequently mined at the center using a mining pool and then distributed to you.
The main disadvantage of cloud mining is that the majority of contracts are time-locked, which means you could lose money if the price of DOGE falls below the operating and electricity costs involved in mining it.
The user does not need to own specialized equipment, yet this can also be just as successful as joining a mining pool. All that is required for those choosing cloud mining is a dogecoin wallet.
The following well-known cloud mining pools accept DOGE:
Nicehash
Genesis Mining
