Dogecoin, as often repeated, has reached stellar heights from being a mere joke cryptocurrency.
Apart from its surging yet volatile value and a loyal, bullish trading community, Dogecoin has drawn a record influx of miners to its network. As such, more are expected to follow suit. But the question is, what do you need to know to begin mining Dogecoin? Is it profitable? Is it really worth a serious crypto miner's time?
Truly, the coin has gone a long from being just an intentional parody project led by software engineers Jackson Palmer and Billy Markus, and wanted the cryptocurrency to be as "ridiculous as possible." Well, that joke turned out to be one of ten top crypto assets in the world, flaunting a $32 billion market cap and a global fanbase.
Dogecoin's Phenomenal Rise Led to Increased Mining Interest
Its phenomenal rise in the early part of 2021 is attributed to Internet pop culture and continuous promotion from celebrity investors, such as Tesla and SpaceX CEO Elon Musk and Dallas Mavericks owner Mark Cuban. This has led to a significant interest in Dogecoin mining, with mining profitability had soared to a new six-year high.
DOGE's blockchain runs similar to other digital coins, such as Bitcoin and Litecoin, wherein it employs a system that adds new blocks to a decentralized ledger and reaches agreement among network participants.
This is called a "Proof-of-Work" mechanism that involves "mining," wherein participants compete for the right to add new blocks that contain pending transactions to the blockchain ledger using dedicated and high-end computer equipment, a comprehensive guide on Yahoo! Finance said.
Miners would then use these computers to create a fixed length code called a "hash" with a value equal to or lower than the target value of the new block, known as the "target hash." The miner who creates the winning code gains the exclusive right to add new transaction data to the new block in the chain, thereby rewarded with newly minted coins.
Hashes produced is random, and because of this, it follows a trial-and-error process until a miner wins.
How Much Dogecoin Can Be Mined in a Day?
Unlike most cryptocurrencies that have a maximum supply cap, Dogecoin's supply will increase indefinitely over time as miners get new coins. These new blocks are found around once a minute on the Dogecoin blockchain, unlike on Bitcoin, which takes around 10 minutes to discover new blocks. In other words, it would take only a minute to mine a Dogecoin, but on average terms according to a Dogecoin mining calculator, a miner could mine 95.6245672 Dogecoin per day, with a hashrate of 2,200,000 kilo hashes per second.
Dogecoin utilizes a hashing algorithm called Scrypt, which makes mining faster and less energy consuming.
At the start, it was easier and simpler to mine Dogecoin having less participants in the network. Anyone in the network could mine the coin individually. When the popularity of DOGE soared, the mining process became more challenging and complicated, leading miners to form groups called "mining pools."
These mining pools mine Dogecoin as a single entity. Rewards are shared among pool members equally by the amount of computer power each miner commits. In addition, Dogecoin is likewise earned through cloud mining, wherein miners or mining pools rent computing power from a data center, paying a monthly or annual fee. The coin is mined at the data center through a mining pool then shared with each participant, based on the computing power being paid for.
Is Dogecoin Profitable for Miners?
But will Dogecoin make miners profitable? With the recent price surges, it seems worth the effort, but miners should not expect to become millionaires in no time. To get the best possible chance of making a profit, acquiring the most powerful hardware, such as an application-specific integrated circuit (ASIC) running CGminer or EasyMiner, and joining a mining pool would certainly help.