Dogecoin Has a Top Dog Worth $2.1 Billion

The dogecoin market has a pack leader.

Records show that a person, or entity, owns about 28% of all of the cryptocurrency in circulation—a stake worth about $2.1 billion at current prices. The holder’s identity isn’t known, which is common in the opaque world of digital currencies.

It is hard to tell what to make of this giant position in what has long been a small and niche corner of the cryptocurrency world.

Dogecoin was created in 2013 as a satirical homage to bitcoin. Its developers were riffing off the meme of a Shiba Inu dog with bad spelling habits. It wasn’t designed to be used as a form of payment, or as anything except a joke. At the start of 2021, a dogecoin was worth about half a cent, even as bitcoin prices had surged to nearly $30,000.

Things have changed this year. Dogecoin surged in popularity after business and pop-culture icons including Tesla’s Chief Executive Officer Elon Musk, rapper Soulja Boy and “Malcolm in the Middle” star Frankie Muniz began promoting it online. It isn’t clear what caught their attention.

Dogecoin’s price has climbed over 900% this year to 5 cents apiece, according to CoinDesk. That makes the market worth about $6.9 billion, and puts its largest owner’s holdings at roughly $2.1 billion. Like bitcoin, dogecoin is created by a process known as mining: people solve complex mathematical puzzles using computers to unlock new coins.

It is nearly impossible to identify the holder due to the anonymity offered by cryptocurrencies. The account could belong to an exchange on which dogecoin is traded, or to the individuals and groups who run the software that keep the digital currency’s network going, researchers say.

“I doubt anyone has done any serious blockchain analytics on doge,” said Chris Bendiksen, head of research at London-based asset management firm CoinShares. “I can’t even believe we’re having this conversation.”

Research into cryptocurrency transactions has ramped up in recent years. But the focus has been on bitcoin, which crossed $50,000 for the first time Tuesday and rose to a market cap of $940 billion.

What is known is that a single address—the unique identifier of a cryptocurrency account that lets other people find the account on the network—holds about 36.8 billion dogecoin, according to the website Bitinfocharts. That address has held dogecoin since February 2019.

The address also offers an intriguing “Easter egg” for people trying to decipher the identity of the owner: the account has on multiple occasions received 28.061971 dogecoins. Mr. Musk’s birthday is on June 28, 1971.

Tesla and Mr. Musk didn’t return a request for comment.

The billionaire executive on Sunday posted a tweet that appeared to encourage major dogecoin holders to sell most of their coins, after weeks of stoking online interest in the cryptocurrency.

“Too much concentration is the only real issue,” Mr. Musk wrote. “I will literally pay actual $ if they just void their accounts.”

Despite his interest in dogecoin, the major holder’s address is unlikely to belong to Mr. Musk, said Elias Ahonen, author of “Blockland.” Anyone can send dogecoin to a publicly listed address, which could explain the amounts linked to Mr. Musk’s birthday.

Bloated addresses among cryptocurrencies are common. As of January, about 22% of bitcoin belonged to miners and exchanges, according to an analysis by blockchain researcher Glassnode. A miner runs software to verify transactions in the cryptocurrency world, and solves mathematical problems to unlock more newly minted digital currencies.

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Exchanges that allow individual investors to buy and sell cryptocurrencies have often used a single address to store clients’ assets offline, called a “cold” wallet. A wallet is a piece of software to hold cryptocurrency balances. For bitcoin, a given exchange might deal with transactions from around 130 million users, many of whom are retail traders.

Some platforms, such as the popular trading app for GameStop and other stocks from Robinhood Markets Inc., don’t allow buyers of dogecoin and other cryptocurrencies to transfer them to their own wallet addresses. They only let traders buy or sell in the addresses that the brokerage uses.

A high concentration of a cryptocurrency being held by one person, or a few people, isn’t cause for concern, Mr. Bendiksen said. Unlike bitcoin, which caps the number of tokens that can be generated to 21 million, dogecoin has no such limits. That means more of the digital currency can be produced even if one buyer tried to corner much of the existing market.

Still, whoever they are, the single holder could shake up the dogecoin market if they drastically cut their holdings, potentially leading to a precipitous drop in its price.

“I would be very nervous about the newcomers who don’t understand how volatile these assets can be,” said Garrick Hileman, head of research at blockchain.com, a cryptocurrency transactions company.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com