Crypto mining has been around since the invention of Bitcoin. The origins of the phrase are not known, but the concept is clear: you provide your hardware’s power to run the network and you get rewarded for that.
While the concept is simple, the technology behind is not. In essence, you are supplying processing power to the network required to verify transactions, and for that, you get awarded with tokens.
Among the many cryptocurrencies that can be mined, one of them is Dogecoin. Even though the coin was released in 2013 as a joke, it quickly managed to rise and started to compete with the big players on the market. As Bitcoin mining is getting more difficult, many people resort to mining other cryptocurrencies, and today I am going to talk to you about how to mine Dogecoin.
Is Dogecoin Mining Still Profitable?
I want to stress that mining Dogecoin still makes sense. People mine this coin. More than that, thanks to 2021 strong growth of the Dogecoin price, mining of this coin became more profitable. So mining not only “still” makes sense. Rather, it makes more sense than before. Ones prefer to hold DOGE hoping for the growth of the coin while others seek the best buy bitcoin site in the UK to quickly sell what they have mined.
For example, on a crypto marketplace Changelly, Dogecoin can be sold instantly right on the homepage of the website. You only need to sign up (it doesn’t take much time) and scroll down. In the bottom part of the website, there are You Send and You Get Approximately sections. You should specify the currencies of exchange and the amount of DOGE you are going to sell. Tap on Exchange Now.
Then you should enter an address and complete the transaction. Considering, how easy it is to sell DOGE while mining is still available for GPU/CPU rig owners, mining DOGE can really improve your wealth.
Assuming that your knowledge in mining is limited, here is a crash course on Dogecoin mining. When you are part of the network, your machine, the node, makes calculations, and the first node that finishes the calculation will be the one that gets the reward.
Mining is used for the cryptocurrency networks based on the proof-of-work (PoW) consensus protocol. It means that the security and stable functioning of the network depends on mining. The networks based on other consensus protocols (for example, proof-of-stake) don’t rely on mining at all. Mining is needed for validation of transactions. To secure the network from malicious actions, proof-of-work networks (Dogecoin is one of them) actions (transactions) should be validated by the community (miners). The chains of transactions form blocks. In order to validate them, miners must sacrifice some hashing power to the network. Miners set their devices to solve the math problems set by the network to create this energy-consuming barrier that keeps the network safe from intruders. As soon as the problem gets solved, the block of transactions gets founded and the hash is attached to it.
As the mining process is costly, the network incentivizes miners through the block reward. The miner who finds the block faster than others is paid. Dogecoin has no limit in supply so Dogecoins can be mined forever. Mining and proof-of-work in general are hugely criticized for being too consuming. The difficulty of math tasks is growing constantly as more and more people get involved in mining using more powerful equipement. It leads to colossal energy consumption making crypto mining quite harmful in terms of ecology. To perform a shady activity on the network one would have to control over 50% of the entire hashing power in the system. That’s one of the reasons why decentralization matters as it helps to withstand the intruders. Just think of that every hacker will have to deal with the entire community if he wants to hijack the network. The situation when hackers manage to control over 50% of the network and mess with transactions is called 51% attack.
Types of Mining
There are three approaches to mining: mining in the pool, solo mining, and cloud mining. The latter method is drastically different from the rest. In fact, cloud mining doesn’t suppose that you should mine anything yourself. You just choose the plan and pay money. Accordingly to what you have paid, the third party that has mining equipment will do the mining for you. The cloud mining companies mine coins using their own mining farms and every day send customers rewards corresponding with the money they’ve spent on the plan (or mining contract). The more you pay, the more power they use for mining. The rewards go to you, however, the cloud mining platforms charge maintenance fees to keep their equipment well. The main problem with cloud mining is that most cloud mining platforms offer not profitable plans or simply don’t provide fair payouts. There is a great number of cloud mining platforms that appear to be nothing but Ponzi schemes as they sell mining contracts but stop sending customers payouts early after. In most cases, they provide users with weak explanations on the matter and then shut down entirely. Choosing a cloud mining platform isn’t an easy task however, there are several decent providers around the world. Some of them can be used to mine Dogecoin, too.
Now let’s finally move to the basic ways of mining. Most people mine via mining pools, however, some mine solo. Going solo means that you will be working alone on the network, and your machine will be the node. If you join a Dogecoin pool, you will be combining your mining machine’s processing power with the output of the rest members of the pool. When you are a part of a pool, the chances of getting a reward are much higher, but there are some drawbacks, too. First off, you will have to pay fees to be the part of the Dogecoin mining pool, and once the reward comes in, you will get only a fraction of it as the rewards are split between the rest miners. Mining solo, on the other hand, means that you won’t get rewarded as often, but you won’t be paying any fees, and the reward will be entirely yours. I’ll name several worthy ones here. Due to difficulty rise in 2018 Dogecoin solo mining became barely profitable. My recommendation is to join a pool.
Requirements for Mining Dogecoin
There are two main components to mining: the hardware and the internet connection. While the hardware can vary in power, some being able to mine more than others, a stable internet connection is crucial.