Dogecoin Mining 2021: Everything You Need to Know – Yahoo Finance
Dogecoin’s incredible start to the year has attracted record numbers of miners to its network. But how easy is it to mine dogecoin and what do you need to get involved? Dogecoin has come a long way since its modest beginnings as a joke cryptocurrency centered around a viral internet meme of a Shiba Inu “doge.” What was once a parody project purposefully created by software engineers Jackson Palmer and Billy Markus to be “as ridiculous as possible,” is now a top ten crypto asset boasting a $32 billion market capitalization and a global fanbase. Dogecoin’s spectacular rise over the first half of 2021, driven largely by internet pop culture and relentless promotion from Tesla CEO Elon Musk, has unsurprisingly reignited significant interest in dogecoin mining as mining profitability spikes to a new six-year high. Related: Dogecoin Sees Uptick After Elon Musk Tweet Supporting Fee-Change Proposal Even with its recent success, mining dogecoin is still significantly less competitive than mining bitcoin (but still difficult). New blocks are also discovered much faster and coin rewards are substantially higher – 10,000 DOGE per block reward vs 6.25 BTC. Dogecoin’s blockchain network employs the same system for adding new blocks to its decentralized ledger and reaching agreement among its network participants as bitcoin, litecoin and many other cryptocurrencies. Known as a “Proof-of-Work” mechanism, this process involves “mining” where individuals or organizations compete for the right to add new blocks containing pending transactions to the blockchain ledger using specialized computer equipment. More specifically, miners use their machines to try and create a fixed length code known as a “hash” with a value that is equal to or lower than the target value of the new block, known as the “target hash.” Whoever creates the winning code earns the exclusive right to add new transaction data to the next block in the chain and is rewarded with newly minted coins for doing so. Related: 3 Reasons Why China’s Bitcoin Crackdown Isn’t All That Bad Each hash generated is completely random so it’s simply a process of trial and error until one miner wins. Here is how dogecoin mining compares to bitcoin and litecoin mining (as of June 2021): As a rule, PoW blockchains such as bitcoin and litecoin usually have a predetermined supply of locked coins that have to be mined in order for them to be added to the circulating supply (21 million and 84 million, respectively). Think of it as being like actual mining and how precious gems or gold have to be physically mined before they can enter the market. Unlike a vast majority of cryptocurrencies, however, dogecoin doesn’t have a maximum supply cap. Its circulating supply will continue to increase indefinitely over time as miners unlock new coins. New blocks are discovered approximately once every minute on the Dogecoin network. For comparison, Bitcoin blocks are discovered approximately once every 10 minutes. Despite using the same Proof-of-Work system, dogecoin mining operates slightly differently than bitcoin. Bitcoin, which is the oldest and largest cryptocurrency by market cap, uses a hashing algorithm called SHA-256. This might sound complicated but a hashing algorithm is simply a function that generates a fixed-length code using a certain technique. Think of it as random code generators, where each hashing algorithm creates random codes in a unique way. Dogecoin and litecoin use a hashing algorithm called Scrypt, which is less complex than SHA-256. This makes mining litecoin and dogecoin much faster and less energy intensive than bitcoin. The use of a common algorithm enabled Dogecoin and Litecoin mining to be “merged mined”, meaning both coins can be mined simultaneously without impacting operational efficiency. The two share a common algorithm because dogecoin’s design is based on luckycoin, which in turn was derived from litecoin. In its early years, mining dogecoin was much easier because very few people participated in the network. This meant anyone could mine the coin individually. However, as the popularity of DOGE increased, the mining process became more difficult, prompting miners to come together and form “mining pools.” A mining pool is a group of individual miners who mine the cryptocurrency as a single entity, or node, by merging their computing power. The rewards are then distributed among pool participants proportionally by the amount of computer power committed by each miner. Today, there are three main approaches to mining dogecoin: Individual mining/solo mining Mining pools Cloud mining For anyone looking to mine DOGE for fun or simply to understand the process, it can be done independently using a GPU through a software like EasyMiner, for example. The GPU (graphics processing unit) is a specialized processor that renders all images on a computer’s screen, and many laptops and desktop computers use it to improve image processing. However, mining alone can be a difficult process and is rarely profitable unless one is willing to shell out significant sums of money on top-spec equipment and electrical bills. For crypto enthusiasts interested in trying to make a profit from doge mining, joining a mining pool is usually recommended and provides a much better chance of becoming a block validator due to the collective hashing power of the pool. But before jumping into a mining pool, be ready to pay 1%-3% in fees for the privilege to participate and always check in advance how each pool calculates payouts for its members. Popular dogecoin mining pools in 2021 include: Multipool Prohashing AikaPool Dogecoin can also be earned through cloud mining, which is not really mining per se. Cloud mining basically involves renting computing power from a data center and paying a monthly or annual fee based on an agreed-upon contract. The chosen coin is then mined at the center via a mining pool and then shared with you based on how much computing power you pay for. The main drawback of cloud mining is that most contracts are time-locked, meaning you can lose money if DOGE prices drop below the operational and electrical costs associated with mining it. Nevertheless, this can also be just as effective as joining a mining pool and does not require the user to own any specialist equipment. Anyone opting for the cloud mining route simply needs a dogecoin wallet. Popular cloud mining pools that support DOGE include: Genesis Mining Nicehash For individuals interested in mining dogecoin solo or via a mining pool, there’s a range of equipment needed in order to get started. There are three types of hardware equipment you can use for DOGE mining: CPU – your PC’s central processing unit might be an option even today, but it is not really recommended because it can cause damage to your computer by overheating it. GPU – a graphics processing unit is more powerful than a CPU and can be used to mine dogecoin. ASIC – an application-specific integrated circuit is a computing machine built specifically to generate hashes. ASICs are far more powerful than GPUs and, unsurprisingly, more expensive. Anyone planning to buy an ASIC should look specifically for a Scrypt-based ASIC miner. Once you’ve decided which type of hardware to use, you’ll also need to download software to accompany it. Here are some of the leading software options available at the moment: CPU – CPU miner by Pooler. GPU – EasyMiner is great for beginners, CudaMiner works best with Nvidia GPUs, while CGminer does well with all types of GPUs. ASIC – CGminer and EasyMiner can be used with ASICs as well, but most ASIC miners use MultiMiner. A dogecoin wallet is essential for mining and provides a secure place to receive any dogecoin rewards generated from mining. A crypto wallet consists of a public key address for sending and receiving DOGE and a private key to access it. The latter has to be kept secure and not shared with anyone. There are several types of wallets, such as: Online: Anyone mining for fun can opt to use an online wallet such as Coinbase or Binance. These aren’t as secure as other wallet options but are much more convenient to use. Software: Software wallets reside on your PC or mobile device rather than online, which makes them more secure. You can download the original dogecoin wallet or use third-party software wallets. Hardware: Hardware wallets are regarded as the most secure solution for storing crypto assets. These are physical devices similar to a USB stick that store crypto offline. Leading hardware wallets include the Ledger Nano S and Trezor Model T. It’s worth noting, good access to electricity and an internet connection are essential for mining any cryptocurrency. If you opt for ASIC mining, it’s recommended that rigs be kept in a cool and isolated place to prevent overheating and disturbing neighbors with the noise. Well, dogecoin mining can still be profitable, especially thanks to the recent price surge. However, don’t expect to become a millionaire. Having powerful hardware and joining a pool will give you the best possible chance of making a profit from doge mining. If you’re interested in finding out how much you could make (approximately) per month, there’s a dogecoin mining calculator you can use. Market Wrap: Bitcoin Slides to Two-Week Low, Ether to Below $2K as China Reiterates Crypto Ban Dogecoin-Branded NASCAR Crashes as Badly as DOGE Related Quotes Is this the ultimate safe haven? Apple on Wednesday debuted its new iPhone 14 and iPhone 14 Pro lineup complete with Max versions of both devices. Cathie Wood is finding it hard to catch 2020 in a bottle again. The growth investor who became a market icon as the co-founder and CEO of the popular Ark Invest exchange-traded funds (ETFs) has been losing more than winning these days. 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