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How to mine Dogecoin (DOGE)

Read the simple explainer of how Dogecoin mining works, and find out why it's important, whether it's profitable and some of its downsides.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade.

With the recent surge in Dogecoin's popularity, many people are looking for alternative ways to accumulate the token other than by just buying or selling it. Given it is a slightly easier cryptocurrency to mine than some of its pairs, users are focusing on mining as a way of getting their hands on more DOGE.

What is Dogecoin mining? The basics explained

Dogecoin, like all cryptocurrencies, operates on top of a blockchain, which is the way transactions are recorded. Each transaction is registered inside a block of information, which is then linked to the next block.

The process of adding blocks to the chain is called mining and is done by miners. These are simply hardware devices (or computers) that compete to solve a mathematical puzzle. Once that puzzle is solved, the miner adds a block to the chain and is rewarded for the energy expended in the process. Miners are an integral part of blockchains in that they determine which transactions get included along with maintaining the security of the network. Bitcoin also uses this type of mining, which is called proof of work.

Dogecoin uses a mining algorithm called Scrypt, which is a different algorithm than the one used by Bitcoin. Scrypt is less energy-intensive than the Bitcoin algorithm, which allows DOGE to be mined by personal laptops and slightly upgraded hardware devices. Litecoin also uses the same algorithm, which means users can simultaneously mine both cryptocurrencies.

Unlike Bitcoin, which creates blocks on average every 10 minutes, Dogecoin mining adds blocks every minute and rewards 10,000 DOGE tokens for the miner that successfully added the new block.

How to mine Dogecoin in 5 steps

  1. Select your type of mining. There are 3 types of mining available. There is solo mining, which is for individuals that have enough equipment to mine alone; pool mining, where users pool resources and risks to then split profits; and cloud mining, which we will explain below. Research your electricity costs, hardware device options and pick the best method for you.
  2. Buy and install your Dogecoin mining hardware. Although you can still mine DOGE on a personal laptop, mining is an intense process for your computer, so it might be best to pick something more specific. You can use a GPU, which is a graphics card that is better optimised and more powerful than a personal laptop and might be more suited for DOGE mining. You can also use an ASIC miner, which is built specifically for mining cryptocurrencies. This is the hardware used for mining Bitcoin. Some might find ASIC miners unnecessary for DOGE, but they are built for the task and will give users an edge over their competition.
  3. Select your preferred mining software. Depending on the type of hardware you installed, there are several options for mining software. If you installed a CPU, then you may want to look at CPUminer. For beginner miners using a GPU, EasyMiner may be a good choice. If you are using an ASIC miner, you may want to use MultiMiner.
  4. Download a Dogecoin wallet. Your earnings will go directly to your wallet, so make sure to go through the proper security practices and pick the best option for you. Once you have written down your recovery phrase, link your wallet to the mining software.
  5. Start mining. Once you have selected the type of mining you want to do, set up your hardware devices, chosen your preferred software and downloaded a wallet, you can start mining and earning DOGE.

Cloud mining

For users that don't want to or cannot install their own mining rigs, cloud mining is an interesting option. Essentially, you subscribe to a data center that mines for you. The company mines DOGE, pays you the mining rewards and charges you a monthly or yearly fee for doing so. There are several companies that offer these services, the most popular being NiceHash.

It's important to keep in mind that there is a fair amount of risk when cloud mining since you are trusting that a third-party data center's policies are in order. You are also adding to the centralisation of the protocol by using a cloud miner. As always, do your own research and figure out the best option for you.

How much can a Dogecoin miner earn?

Due to the recent price surge, Dogecoin mining can be quite profitable. Miners receive 10,000 DOGE tokens per block mined, which can add up over time, especially if the hype continues. However, it's important to remember that individual miners will have different profit margins and costs than pool miners or cloud miners.

Another issue to keep in mind is tax. Depending on your country or jurisdiction, you might need to pay tax on any profits from mining.

You may want to use a profitability calculator to get an idea of how much money you might be able to make once you set up your mining operation.

The cost of mining Dogecoin

The cost of mining DOGE will depend ultimately on the type of mining you do and the rig you install. If you are cloud mining, then the cost will only be as much as the subscription you are paying.

For those that buy and install their own mining equipment, there are other costs to consider. GPU devices can start at US$350 and go up from there. ASIC miners are extremely popular for Bitcoin mining and are in high demand. These can cost users thousands of dollars and, with current supply chain constraints, are hard to come by.

Another factor for those mining at home or on their own is the cost of electricity. While this might not seem like much at the beginning, it adds up over time.

If you're looking to join a pool, keep in mind that on top of your own electricity costs, pool operators charge a percentage fee for participating. Some start at 1% but can go as high as 5%. As always, do your own research, look into their policies and fees, and calculate what's best for you.

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