The community likes to position Dogecoin as a “Volkscoin” against the supposed bigwig coin BTC. But can Dogecoin also be “mined” profitably without having to spend huge sums of money on equipment?
Word has meanwhile got around that Bitcoin mining can hardly be operated economically on a small scale and without special hardware. But even with the top altcoins it looks bleak for solo miners. This even applies to Dogecoin. However, that does not mean that Dogecoin owners have to be content with the Hodln. Because service providers such as mining pools or cloud mining providers enable even small fish to participate in securing the Dogecoin network and to earn a small amount of additional income.
Dogecoin (DOGE) Mining: Hardly profitable on your own
Even with the most powerful gaming PC, the solo mining of Dogecoin is hardly profitable. If you still want to give a GPU the virtual pickaxe, you are well advised to join a mining pool. Mining pools combine the computing power of their participants to improve their chances of getting the next block reward. The principle is remotely similar to a tip community. Your own share of the block reward is usually proportional to the computing power used, i.e. the hash rate. If you are not afraid of high expenses, you can put together your own mining rig for this. Dogecoin can be mined with both CPUs and GPUs, the latter being more efficient. ASICs tailored to Scrypt, the Dogecoin (and Litecoin) mining algorithm, are even more efficient. Since 2014, Dogecoin can – or should – be mined together with Litecoin via merged mining.
A well-known ASIC for DOGE and LTC is the AntMiner L3. The problem: Like most of the Bitmain miners, the L3 is always out of stock. For used models, too, you have to leaf out a four-digit amount.
Spend Money to Lose Money
In addition, there are the electricity costs that arise when operating the energy-hungry mining hardware – regardless of whether it is a GPU rig or ASIC. The Antminer L3 ++, for example, has an energy requirement of 1,050 watts. To do this, it manages a hash rate of 596 megahashes per second (MH / s). The chance of finding the next Dogecoin is small: Because the 596 MH / s must be set in relation to the hash rate of the network. At the time of writing, this is 356 Terahash / s (TH / s). If you divide this by the 596 MH / s of the Antminer L3, you get 597,315. This means that you have around 1 / 600,000 of the total hash rate in the Dogecoin network. In other words, 597,315 is the number of blocks that are statistically mined until your Antminer finds a Dogecoin block – and earns the block reward of 10,000 DOGE (about $ 2,000 at the time of writing). Even with the short block time of Dogecoin (one minute) this means that you have to plan over 400 days of waiting time to mine a Dogecoin block “Solo” with the Antminer L3. However, that should not be an option for very few.
This also applies to the purchase of the Antminer L3 successor, the Antminer L7, which will be launched in November. The L7 manages an impressive 9,500 MH / s, but also costs at least 12,800 USD – if you can get it at all; the Antminer L7 is also already sold out.
Dogecoin pool mining
Better if you feed your hash rate into a mining pool. At least this increases your chances of getting part of the block reward dramatically. Of course, pool miners only have a partial entitlement to the block reward earned by their mining pool. As a rule, the share is proportional to the hash rate contributed. In addition, mining pools are not charitable associations, but rather charge fees from their members. These are usually between 1 and 3 percent and are deducted from the miner’s share of the block reward.
At the moment, even Dogecoin pool mining is not really worth it in this country; at least if we use the Antminer L3 again and do not have access to free electricity. Because, even if the Scrypt algorithm is less computationally intensive than Bitcoin’s SHA256, DOGE remains a proof-of-work currency. Last year, a kilowatt hour cost German households an average of 33.8 cents (around USD 0.39). With the current Dogecoin rate of around 0.2 USD and a pool fee of 1 percent, the following picture emerges with an Antminer L3:
With the same hash rate, electricity costs and Dogecoin exchange rate, this would mean a loss of 1,262 USD annually – profitable is different. The picture only brightens up a bit if you dig Dogecoin via merged mining with LTC. In 30 days you could mine 1,193 DOGE and half a Litecoin with the L3 +.
It looks a lot better with the Antminer L7, if you could get hold of one. With its 9,500 MH / s you could currently mine around 450 DOGE per day. After deducting the cost of electricity, the net proceeds would be around USD 77. However, it must be taken into account that the peak power at 3,425 W only occurs when the device is cooled to at least 25 ° C. The electricity costs for cooling further reduce the profit.
It only becomes really profitable if you factor in the LTC Block Reward. With the 9,500 MH / s you currently have a net profit of around 4,000 USD per month.
Dogecoin cloud mining
Finally, there is also the possibility of mining Dogecoin “via the cloud”. Providers such as Nicehash or Genesis Mining make it possible to rent mining devices or their hash rate for certain cryptocurrencies – at least in theory. In practice, the same rule applies here when buying ASICs: allotments are very limited and often sold out. In addition, cloud mining contracts are often concluded for a fixed period of time, which leaves little room to react flexibly to market developments. If you change your mind in the meantime, for example because the value of the coin being mined has fallen massively, your hands are tied.
An example: With the provider Nicehash – one of the few larger cloud mining platforms that currently still offer scrypt mining contingents, 1 TH / s currently costs an average of 0.3564 Bitcoin per day. To rent the computing power of the Litecoin and Dogecoin miner Antminer L3 + (around 0.0006 TH), you would have to shell out 0.00021384 BTC (at the current Bitcoin rate: around 7 euros) every day. If you achieve the Dogecoin proceeds that are calculated in the Solo Mining section – around 31 DOGE (currently 5.20 euros) per day – that would still be a losing business. Especially when you consider that Nicehash and the mining pools used in each case charge additional fees. The same applies to cloud mining as it does to solo mining: less is less.
Conclusion: Dogecoin mining is not for everyone
Dogecoin mining is currently not really profitable – unless you are willing to spend huge sums on equipment and hijack your neighbors’ high voltage connection. With the hash power of a single L7, under the right conditions, you could win a comparatively large amount of mining rewards today. However, if Bitmain delivers the new generation of its scrypt miners in November, this should also be reflected in the Dogecoin Difficulty – you would then earn less DOGE or LTC per hash.
If you still want to try mining for fun, you will find it in the software, for example Easy miner a beginner-friendly starting point.