What did I learn from 1 week of Dogecoin mining

I am a late “adopter” of cryptocurrency. I heard of Bitcoin many years ago, but couldn’t truly understand it or take serious in it. When too many cryptocurrency news keep popping up, perhaps it’s time to get my hands on some coins.

How to get my hands on some coins? Mining of course, unless I sell something which accepts cryptocurrency as payment. I come across 3 cryptocurrency: Bitcoin (2009), Litecoin (2011) and Dogecoin (2013). Based on my understanding, mining get exponentially more difficult as times go (depending on how much had been mined). So it would be extremely difficult to mine Bitcoin, and Dogecoin is fairly new with light humour in it, so Dogecoin it is.

Below are a few of my observation as a Dogecoin miner for a week.

The Wallet

Firstly, I need a Dogecoin wallet, which is a piece of software which can store Dogecoin in a file. After the wallet is installed, it needs to download the blockchain, which is supposed to be ALL the Dogecoin transaction data as of today, which takes about 8 hours to download before I could start using the wallet. When someone else use Dogecoin to send to receive (a transaction), it will add to the blockchain, which will get bigger and bigger overtime.

There is no username for your wallet, so there is some basic anonymity. You could password protect your wallet (like a password protected zip file), just in case someone get their hands on your wallet. I think you can keep multiple copy of your wallet on multiple machines (I might be wrong).

How does people send money to you? You can generate an address (a string of characters), and ask them to send money to this address using their wallet software. You can generate multiple addresses to identify what money come from whom.

The Mining

There are CPU-based and GPU-based (using NVIDIA or AMD graphic cards) mining. Somehow GPU-based mining perform much better.

Somehow pool-mining perform better than solo mining, so join a pool.

Mining on my 2013-end Notebook (Gen4  i7-4500U @ 1.8Ghz, Nvidia Gefore 740M)

Mining speed in measured in khash/s, where each machine (or worker) should at least produce 10 khash/s in order to make mining minimally worthwhile at the current state.

The i7-4500U can run 4 threads, where each thread yields 10 khash/s, so my notebook is capable of 40 khash/s. I found that I can run on 3 threads in the background and my OS and virtualbox still run normally without much slowdown while I do web development in Python. The heat is slightly hot, and it isn’t noisy.
The Nvidia Gefore 740M only have 1 core and is capable of 40 khash/s. The heat is quite hot, and I am afraid it might damage the notebook if running for a long time.

So my notebook is capable of 80 khash/s, but I only run CPU-based mining on 3 threads (30 khash/s) for 12 hours per day.

Using a Dogecoin calculator, at 30 khash/s  (current difficulty=1771, assuming block reward=500000), I could mine 7 Dogecoin per hour, 170 Dogecoin per Day. At the current exchange rate (BTC per DOGE) of 0.00000212, the daily income is USD 0.35 (about 500 Doge to 1 USD). Since I am only running 12 hours a day, so I only get half of it.

Mining difficulty goes up fairly fast (it was 385 on 1st Jan 2014). Current Block Reward is 0 to 1,000,000 DOGE (500,000 is used as Average), but it is estimated to drop to half in 18 days.

Mining on my 2010 Notebook (Gen1 i5 M460 @ 2.5Ghz)

The i5 M460 could run on 4 threads, where each thread yields 3 khash/s, so my notebook is capable of 12 khash/s (it means my 2013 Notebook’s CPU is 3.33 times more powerful). The AMD Radeon performance is too pathetic, clocking only 3 khash/s.

Given the cost of power consumption and all that, I am afraid mining isn’t marginally worthwhile on this machine.

Mining on Digital Ocean (2 CPU, USD 20/month)

The DO server with 2 CPU could run on 2 threads, where each threads yields 6 khash/s, and the instance is capable of 12 khash/s (it means 2 CPU on DO is equivalent to the processing power of Gen1 i5 M460 @ 2.5Ghz).

At 12 khash/s, it could generate 67.5 Dogecoin per day (difficulty=1771, block reward=500000) and about USD 0.13 per day. The cost of server is USD 0.66 per day. So this is definitely not profitable at the current state.

Mining on AWS Spot Instance (c3.2xlarge, 8 CPU, USD 0.112/hour)

c3.2xlarge on-demand instance cost USD 0.60/hour, so the spot instance provide about 80% discount.

The AWS server with 8 CPU could run on 8 threads, where each threads yields 4 khash/s (DO CPU performs 50% better), and the instance is capable of 32 khash/s (it means 8 CPU on AWS is equivelant to 80% of processing power of Gen4  i7-4500U @ 1.8Ghz).

At 32 khash/s, it could generate 7 Dogecoint per hour (difficulty=1771, block reward=500000) and about USD 0.02 per hour. The cost of server is USD 0.112 per hour. So this is definitely not profitable at the current state.

Conclusion

Dogecoin mining is hardly profitable at the current state of 25 Jan 2014.

If you have a new and powerful CPU, you could mine in the background and hopeful of getting 500 Doge (about 1 USD) within a week. If you have desktop with powerful GPU, you might do better. But the future isn’t getting brighter for Dogecoin mining, just mine for fun.

I didn’t try to build a GPU-based miner or try GPU rig or AWS GPU-based instance as I believe I am too late into the game. Those with earlier experience mining Bitcoin or Litecoin would have a better advantage.

If somehow you get your hands on some free idle server or nvidia super computer, it could still be fun.

A CPU on DO yield 6 khash/s while AWS yield 4 khash/s. A Gen1 i5 M460 @ 2.5Ghz could yield 12 khash/s. A Gen4  i7-4500U @ 1.8Ghz yield 40 khash/s. I overestimated the CPU capability on AWS and DO. 10 CPU on AWS or 6.66 CPU on DO is equivalent to the processing power of Gen4 i7-4500U on a 2013-end notebook.