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With so much hype around Dogecoin, it is easy to get lost in the FOMO and dive right into it. However, it is crucially important to take a step back and determine profitability from a mathematical standpoint when considering how much money you can make mining Dogecoin.
You can make money mining Dogecoin with the right equipment and a little know-how. How much money you can earn depends on the current market conditions, mining difficulty, choice of a mining rig, solo mining or mining pools, and electricity costs.
Here we will focus on the factors critical to earning a profit when mining Dogecoin. Although there are many unknowns when calculating profitability, we can still determine if mining Dogecoin is worth the effort.
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Factors That Determine Dogecoin Mining Profitability
Here are all the factors to take into account when determining the profitability of mining Dogecoin:
- The equipment quality and the cost of that mining equipment
- The competition of other miners
- The price of electricity consumption 24 hours a day, 365 days a year
- The price of the Dogecoin
Technical Knowledge Required To Mine Dogecoin
Mining Dogecoin and other cryptocurrencies require a bit of technical knowledge. Knowing this will allow a new miner to set up their mining rig quickly and start catching blocks.
Here is some of the basic terminology all new miners must understand.
- Blockchain: Blockchain refers to the distributed ledger, the backbone of all cryptocurrencies. Blocks on the blockchain must be validated by the nodes and contain hashes of all transactional information. Miners only receive a reward when a block is verified and added to the original chain.
- Algorithm: The Algorithm is a set of defined parameters that allow mining, promote security, and enable transactions on the blockchain. Dogecoin operates on the Scrypt algorithm.
- Hash Rate: Hash rate is the amount of computational power it takes to mine new coins. The higher the hash rate, the more chances of getting a new block. The hash rate also refers to the computational power of all the miners that protect the network. Higher hash rates make it more challenging to execute the dreaded 51% attack.
- Block Time: Block time is the parameter that refers to the amount of time it takes to encounter a new block, verify transactions, and add it to the blockchain. Dogecoin mines new blocks every minute, while Litecoin mining takes 2.5 minutes per block. Bitcoin is one of the slowest in this regard, mining a new block roughly every 10 minutes.
- Mining Difficulty: Difficulty indicates the challenge miners face in obtaining a new block. Mining difficulty either increases or decreases depending on how many miners are present on the network.
- Mining Commissions: Mining commissions are a small fee that users pay to send transactions on the network. It is part of the block reward that miners receive.
- Block Reward: The block reward is the prize miners receive for each mined block added to the blockchain. At the current time, a Dogecoin block reward consists of new coins (10,000 DOGE) and transaction fees.
- Profitability of Mining: Profitability is the calculation of the potential benefits of mining when considering all the factors. Miners become more profitable when the price of mined coins appreciates higher than the price of mining them.
Solo Mining Dogecoin
Mining Dogecoin with a CPU on a personal computer was profitable until recently because there wasn't much competition for blocks. However, many miners jumped on Dogecoin once the price went parabolic.
When this happened, hash rates shot up, and mining difficulty increased exponentially.
Miners who want to solo mine should set up either GPU or ASIC miners. Application Specific Integrated Circuit (ASIC) is ideal as they mine crypto exclusively. These rigs consume large amounts of electricity but are the most efficient and profitable way to mine Dogecoin.
Joining a Dogecoin Mining Pool
Mining pools combine many miners, allowing each one to bring some computing power to the mine as a single entity. In this way, miners can compete with the big mining farms to get the block reward.
A mining pool reduces the time it takes to mine a single block, which means there is a greater chance of earning a profit quickly than working alone with a limited budget.
The mining pool must be compatible with the Dogecoin Scrypt algorithm.
Prohashing: Prohashing is compatible with Scrypt, X11, Equihash, and SHA-256.
Multipool: With Multipool, mine DOGE and Litecoin at the same time.
Hardware Requirements to Mine Dogecoin
Mine Dogecoin cryptocurrency with:
GPU (graphics card): There is a wide variety of GPUs to select from. Here are some of the most popular options:
- ASUS RX Vega 64
- Nvidia GeForce GTX
- SAPPHIRE Pulse Radeon RX 580
Scrypt ASIC Mining: This mining rig is designed to do only one task. Scrypt ASIC miners allow miners to mine Scrypt-based cryptocurrencies. ASIC rigs are powerful yet are expensive, very noisy, and can reach high temperatures.
Here are some of the ASIC Miners for Dogecoin:
- Bitmain Antminer L7
- Scrypt BW L21 Miner
- Innosilicon A2 Terminator
Software to Mine Dogecoin
Whether mining with ASIC, GPU, or CPU, add-on software is required. Here is a small list of the software used to mine Dogecoin.
GPU: Miners who want to mine with a GPU have many software options:
- EasyMiner - Simple interface which is ideal for anyone just starting out
- CGminer - Functions with any GPU
- CudaMiner - Pairs up well with an Nvidia GPU
Scrypt ASIC Rig:
- MultiMiner is ideal for Scrypt-based cryptocurrencies such as Litecoin and Dogecoin.
- CGMiner is one of the most popular options.
- EasyMiner is simple to use as the name suggests.
Is There Another Way to Mine Dogecoin?
Mining Dogecoin with cloud mining may be desirable for people who don't have the equipment to mine or don't want to mine for whatever reason. With cloud mining, one rents computing resources for a monthly or annual fee.
The Advantages of Cloud Mining
Cloud mining is less expensive than having to set up a mining operation. Additionally, miners don’t have hot and noisy hardware to worry about. With cloud mining, there aren't many technical barriers to setting up a mining contract.
The Disadvantages of Cloud Mining
Cloud mining companies don't delve into details about how they operate. If the price of Dogecoin goes down in price, mining on the cloud may not be profitable, as the cloud mining contract will still require the same rent payment.
This uncertainty makes it difficult to calculate whether cloud mining is a profitable option on a long-term basis.
Is Dogecoin Mining Still Profitable?
Mining Dogecoin is still profitable, but mining profitability can reverse quickly. Profitability comes down to Dogecoin's difficulty based on the total computing power currently mining blocks and generating hashes.
Since this changes often, check mining profitability frequently.
Dogecoin Mining Calculator
Use this Dogecoin mining calculator below to determine how profitable it will be for you to mine Dogecoin on a daily basis.
Make Money Mining Dogecoin
The estimated mining rewards in USD when mining at a hash rate of 9,500 MH/s while paying $0.10 kWh for 3,425 W per day in electricity costs are:
- Hourly $4.88
- Daily $77.26
- Annually $28,200
As an example, the Bitmain Antminer L7, which performs at 9,500 MH/s, costs roughly $16,400.
Money (USD) Earned in Total at the End of One Year
Assuming no price and difficulty fluctuations, the annual mining rewards of $28,200 minus the $16,400 price of the Bitmain Antminer L7 9,500 MH/s miner equates to a yearly profit of $11,800.
Should I Mine Dogecoin?
There is money to be made mining Dogecoin. However, any serious miner will have to invest a large amount of money initially in a modern-day ASIC mining rig. Smaller miners with a GPU mining setup can also earn a small profit by joining a mining pool.
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