Cryptocurrency Mining vs Staking: What Is the Difference?

Crypto mining and staking are the two most widely used methods of validating transactions on the blockchain and, at the same time, keeping it secure.

However, they have different work principles and cannot be treated equally. So, what separates the two techniques, and which is better to use? Read on to find it out.


Staking or Mining: What Is Better?

These two concepts differ primarily in their methods of adding new blocks of transactions. However, these two methods are similar in terms of the objective to validate transactions. 

Unlike staking, cryptocurrency mining is based on the Proof-of-work (PoW) mechanism, and its goal is to complete puzzles and other tasks for the hash power. Hash changes depending on the network difficulty. This technique enables the system to stay secure and resilient against cyber attacks. It also helps to hold together decentralized networks. 

In addition, mining requires users to use enough hash power to mine blocks successfully. For this, they need to employ powerful software. Since hardware can often be expensive and far from energy-saving, users are often drawn to staking instead. 

Staking, in its turn, requires you to stake your coins only. It means they are going to be ‘locked’ with an exchange platform for a stated amount of time and can’t be withdrawn during this time. As a result, these coins become illiquid and act as a passive investment. Note that only owners of cryptocurrencies with the Proof-of-stake (PoS) protocols can take part. 

Coins such as ETH, Solana, Lucky Block, Cosmos, and others are good for staking. If you buy Ethereum, you can exchange it back to fiat in different volumes at reputable exchanges, like 0.008 ETH to USD.   

Why Is It Hard to Define Which Method Is More Profitable

Deciding on whether mining or staking is better has a lot of difficulties. If we view them from a wide number of standpoints, it’s impossible to decide which of them is better.

Firstly, many ‘pools’ emerge these days, making mining and staking more accessible and rewarding. They also allow users to make smaller contributions and hence, smaller proportions for reward blocks per each member, but let them be consistent and well thought through. 

Does Mining Still Offer More Gains and Benefits?

Mining is a potentially profitable activity, but it has pros and cons. 

Pros

  • High reward-receiving ability
  • Quick closure of arrangements
  • Being able to freeze your resources anytime 
  • Your control over the process

Cons

  • High (sometimes incredibly high) maintenance expenses. Hardware start-up costs and electricity bills are the two clear downsides
  • Chances of losing costs due to fraud 

What Pluses and Minuses Does Staking Have?

Staking is a more innovative way of earning crypto compared to mining. In addition, it is pretty straightforward and suits complete newbies. 

Pros

  • No hardware/upfront investment is needed 
  • No technical skills or knowledge are required for staking. Staking takes place on specialized exchanges, so you only need the basics about validating transactions and the crypto market overall
  • Eco-friendliness. You will save electricity and won’t leave such a great carbon footprint 
  • Convenient payment increments. Reward coins grow in increments when arrangements are closed, and the reward sizes go up 

Cons

  • Fees. Some platforms charge considerable fees that cut your earnings down as a result
  • No space for speculation. Yes, here you can’t sell at your prices and get more profit than expected

Final Thoughts

To sum up, both earning methods have significant advantages and downsides. They are still good and unique ways to gain interest and see the block creation process from the inside. If you count yourself a beginner and would like to try an eased version of earning crypto rewards without investing much, go all into staking. 

Before you can stake, make sure to buy coins with PoS, such as Ethereum or Cardano. Exchanges often offer to convert 0.23 ETH to USD or vice versa at good rates. 

On the other hand, if you’re a knowledgeable and experienced user, starting mining can make sense.

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