The cryptocurrency Dogecoin hit an all-time price high this week, surpassing 10 cents and sending its Reddit community into a meme frenzy. But some people don’t want to simply buy the digital tokens, they want to create them.
The process is known as mining, and it’s possible to do with some computer hardware and software. Unlike Bitcoin, which has a hard cap of 21 million tokens available to be mined, there is no upper cap on the potential supply of the dogecoin currency.
There are currently more than 129 billion dogecoins in public circulation, according to tracking data published by CoinMarketCap and CoinDesk.
Mining DOGE may not require as much computing power as Bitcoin, but it’s still not a process for beginners, and the rewards are essentially a competitive lottery.
Broadly, crypto mining works like this: all transactions of tokens are stored on a ledger called a “blockchain,” which is distributed across a network of computers called nodes. The nodes assign new transactions into groups, which are known as blocks.
The blocks are checked by all nodes before being successfully added to the ledger. It is the confirmation process that needs a lot of computer power. The miners—the people behind the nodes—are rewarded with new cryptocurrency in return for the work.
Dogecoin’s blockchain, called Dogechain, is publicly online and shows transactions in almost real-time. The process is often referred to as a lottery because only one node at a time will win a reward—the computer that can confirm a new block fastest.
The block reward when mining dogecoin is 10,000 dogecoin. Both DOGE and Litecoin merged mining in 2014 and are based on an algorithm known as Scrypt. In comparison, Bitcoin uses the SHA-256 algorithm, which needs more computer power to mine.
Dogecoin can be mined solo, which means the spoils will be kept by a single person but competition is very high, or in a pool, which is when a group shares computing power to boost the overall chance of winning the transaction confirmation lottery.
To start mining, you will need a computer with a Windows, Apple Mac or Linux-based operating system and a strong internet connection. The more powerful the CPU and graphics card in the machine the better. An additional option will include a Scrypt ASIC Miner, which is made to mine scrypt-based currencies like dogecoin.
You will also need some computer software that can use your device’s CPU or GPU to mine the cryptocurrency. These include Cpuminer, CGminer and EasyMiner.
Mining pool software that can be downloaded includes Prohashing and Multipool. You will also need a digital wallet to store any tokens mined, such as Multidoge.
Dogecoin was launched in 2013 by two software engineers, Billy Markus and Jackson Palmer. Its lighthearted tone and meme-filled community has gained the support of the tech billionaire Elon Musk, who regularly posts about it on Twitter.
On the GitHub coding forum in 2014, Palmer wrote about dogecoin: “The goal for the currency is to keep approximately 100 billion coins in circulation—thus after 100 billion Dogecoins are created, rewards will continue at 10k each block. This will help maintain mining and stabilize the number of coins in circulation… at 100 billion.”
While that was the aim, there remains no cap on how many can be mined. The amount of dogecoin in circulation is rising by about five billion per year, experts have said.