What is Crypto Mining and Minting?

Aug 14 / Stephen Pollard

What is Crypto Mining and Minting?

In cryptocurrency, mining and minting are the two primary ways new coins enter circulation—but they work very differently.

Mining is the process used in Proof of Work (PoW) blockchains like Bitcoin and Kaspa. It involves using powerful computers to solve complex mathematical puzzles, which secures the network and processes transactions. Successful miners are rewarded with newly created coins.

Minting, on the other hand, is associated with Proof of Stake (PoS) or similar consensus models, such as those used by Ethereum, Solana, and Cardano. Instead of solving puzzles, validators lock up (or stake) their existing coins to win the right to create (“mint”) new blocks. In return, they earn rewards—also in the network’s native coin.

How Crypto Mining Works

  1. Transaction Pool: Transactions are broadcast to the network and grouped into a block.

  2. Puzzle Solving: Miners compete to find a hash that meets the network’s difficulty target.

  3. Block Addition: The winning miner adds the block to the blockchain.

  4. Reward: The miner receives a block reward plus transaction fees.

For example, Bitcoin miners currently earn 3.125 BTC per block (as of the April 2024 halving) plus fees, which can be worth thousands of dollars.

How Minting Works

  1. Staking: Validators lock up their coins for a set period.

  2. Block Proposal: Validators are chosen (often randomly, weighted by stake size) to create new blocks.

  3. Validation: Other validators approve the block before it’s added.

  4. Reward: The validator receives new coins and/or transaction fees.

For instance, Solana validators earn SOL both from block rewards and transaction fees, but a portion of the newly minted SOL can also be locked by stakers to further secure the network.

Resale and Market Supply

  • Mined Coins: Miners often sell their rewards quickly to cover operational costs like electricity, adding immediate liquidity to the market.

  • Minted Coins: Validators may sell rewards, but staking encourages long-term holding, which can reduce circulating supply and support price stability.

Feature Mining (PoW) Minting (PoS)
Resource Cost High electricity + hardware Low electricity, coins locked as stake
Speed Slower block times Often faster block times
Environmental Impact High Lower
Coin Flow Miners sell to cover costs Rewards often staked or held

The thing to remember about Mining and Minting:
Both secure the blockchain, but mining uses computing power while minting uses staked coins—impacting how and when new supply hits the market.

Thank you!

Checkout our other relevant blogs

What to know more about the crypto market in a non-technical way? Enrol in:

Latest from our blog

Disclaimer:

This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency investments are highly volatile and carry significant risks. Always do your own research and consult with a qualified advisor before making any investment decisions. We do not guarantee the accuracy or completeness of any information provided. Past performance is not indicative of future results.
Created with