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More than other years, 2021 has seen the rise of many altcoins. One of these is DOGE, the native token of the Dogecoin blockchain. The Dogecoin blockchain is looking to surpass its label as a meme coin and provide meaningful services. It also allows users from around the world to contribute to its blockchain. Practically anyone with the necessary resources can contribute to Dogecoin’s platform. You can participate in mining Dogecoin and make passive income from DOGE.
What Is Dogecoin?
Dogecoin is a blockchain based on the popular internet meme “doge.” It gained immense popularity in 2021 due to its dramatic increases in price and endorsements from celebrities. Some of the major proponents are Tesla Inc. (NASDAQ: TSLA) CEO Elon Musk and Dallas Mavericks’ owner Mark Cuban.
The blockchain is also looking to provide services in the financial industry relating to payments. Over 1,700 retailers currently accept DOGE as payment, with many more considering adopting the token. However, payments need to be verified to mitigate the risk of fraud and cyber attacks.
Proof-of-Work Consensus Explained
Dogecoin’s network uses a proof-of-work (PoW) consensus model to verify which transactions are legitimate. Computers verify transactions as they compete to complete math problems and earn rewards for doing so. These rewards are given at every block or set period of time. Information on every block is placed into a tamper-proof ledger on Dogecoin’s blockchain.
Anyone around the world can verify transactions. Those who verify transactions are called “miners.” Miners earn block rewards proportionally to the amount of computing power they contribute to the chain.
Bitcoin Mining vs. Dogecoin Mining
Dogecoin is largely based on Bitcoin’s mining model, so the 2 systems of mining are fairly similar. However, a few key differences exist.
Block rewards are awarded after a set period of time. For Dogecoin, these rewards are given every minute. In other words, rewards are given to miners who verify transactions during the last minute. Conversely, Bitcoin gives block rewards every 10 minutes.
Block rewards are also halved to combat inflation. Bitcoin’s block reward halves every 210,000 blocks or every 4 years. Current block rewards for Bitcoin are 6.25 BTC. Bitcoin will continue to halve for at least another 100 years. Dogecoin has already stopped halving. The block reward for Dogecoin is 10,000 DOGE per minute in perpetuity.
The Bitcoin mining network is also much larger than Dogecoin’s. Dogecoin currently boasts a combined network hashrate of around 325 TH/s as opposed to Bitcoin’s network hashrate of over 176,000,000 TH/s.
Because of the block rewards and relative size, Bitcoin is more profitable to mine. However, Dogecoin can be a great way to gain experience with mining.
How To Mine Dogecoin
Now that you understand the basics of mining and Dogecoin’s network, you may be interested in contributing to the network yourself.
- Buy necessary mining hardware.
Because mining requires large amounts of computing power, a standard laptop or desktop will not be profitable. The best option is to either buy a computer that specializes in mining or create a powerful computer to mine. If you do not want to build a computer from scratch (which can be daunting), you can purchase an ASIC miner.
ASIC miners are a great option for beginners as they are easy to use. Antminer L3+ is a great option for starters because it is not as expensive as other machines and is beginner-friendly.
However, if you are up for the challenge of building a computer, you can take that route. The main piece of hardware you need is a graphics processing unit (GPU). A GPU is the piece of machinery that does the mining. However, GPU prices have seen major price increases and may not be as cost effective.
Alternatively, you can lease mining hardware from platforms like Kryptex, and they will do all the mining for you. You pay based on the time and hash power you seek to use, and you’ll be entitled to all the miners’ profits.
- Join a mining pool.
Once you have a mining rig built and ready to use, you connect your machine to a mining pool. A mining pool collects the computing power of many individuals to earn more consistent and predictable block rewards.
One of the best pools is F2Pool. F2Pool proves low fees and quick payouts for users. It also owns a fair amount of computing power on the chain, so it can help users earn even higher rewards.
- Start earning Dogecoin.
Once you are connected to a pool and have begun mining, you can start earning rewards. With an Antminer L3+, you can expect to earn around $6.00 per day per computer less electricity and upkeep costs. Whattomine offers a great Dogecoin mining calculator. You can enter in electricity costs, fees and hardware costs to determine overall profitability.
Best Cryptocurrency Wallets For Dogecoin
Once you have earned DOGE, you will need a place to store it. The mining pool sends your hard-earned DOGE to a wallet, which is a place to store cryptocurrency.
Best Hardware Wallet: Ledger
Ledger is a hardware wallet that supports the buying, selling and swapping of DOGE. Hardware wallets are physical machines that store crypto, similar to a bank. Ledger currently offers 2 types of hardware wallets: the Ledger Nano S and Ledger Nano X. The Nano S is more basic while the Nano X offers more functions.
When you buy your Ledger hardware wallet and download the software onto your computer, you will be given a wallet address. You enter it into your pool. This process lets the pool send rewards directly to your hardware wallet.
Is Mining Dogecoin Worth It?
Mining Dogecoin has certainly become more profitable in the last year. With more transactions being processed every minute, the need for miners to verify transactions has grown. However, several other tokens offer much higher profitability and lower barriers for entry. If you are just looking to experiment with mining and gain experience with the system, Dogecoin mining may be a good option.
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