Lesson 08 · 7 min
Mining & staking: how new coins are made
Coins do not appear from nowhere. Networks pay people to keep them running — through mining, staking, or neither. Know which is which before chasing any.
Mining (proof-of-work)
Bitcoin and a few others are secured by computers racing to solve a maths puzzle. The winner adds the next batch of transfers and earns new coins plus fees.
This is no longer a laptop hobby. Profitable mining needs specialised hardware, cheap electricity, and cool space — and even then margins are thin and equipment ages fast.
Cloud mining contracts promising steady returns are a common scam. If you cannot point at the machine you own in a facility you can visit, treat it as a loss.
Staking (proof-of-stake)
Ethereum and Solana use staking instead of mining. You lock up coins to help secure the network and earn a share of rewards, typically paid in the same coin.
Staking from your own wallet keeps your keys. Staking through an exchange is simpler but means the exchange holds your coins and you rely on it.
Rewards are modest — single-digit percentages a year for major coins. Anything promising far more is a red flag.
The decision that matters
Mining and staking both mean committing real money to earn a coin you believe in. If the coin itself loses value, your rewards rarely make up for it.
Start small if at all. Before committing, understand slashing (staking penalties for going offline or misbehaving) and lock-up periods during which you cannot withdraw.
Worth remembering
- Mining needs hardware and cheap power; not a home sideline in 2026.
- Staking earns modest rewards — beware of promises far above single digits.
- Commit only coins you already believe in and can leave locked up.