Crypto staking vs. mining: What are the differences?

On the surface, staking and mining strive to do the same thing: Keep blockchains running. In practice, they reflect two opposing ideas about security, cost and participation. Here’s how those differences play out.

What is crypto staking and how does it work?

Crypto staking is a way of participating in the operation of blockchain networks by locking up tokens to validate transactions. It’s central to blockchains that use a Proof of Stake (PoS) consensus mechanism.

In PoS systems, transaction validation is handled by validators rather than miners. Validators are selected based on the amount of cryptocurrency they have staked and, in some networks, how long it has been locked. This stake acts as an economic commitment to the network’s integrity.

Staked tokens are typically not available for use or transfer during the staking period. In return for their participation, validators – and, in some cases, users who delegate tokens to them – receive protocol-defined incentives. These outcomes aren’t guaranteed and can vary depending on network rules and conditions.

Staking also plays a role in network security. As validators have capital at risk, acting against the network’s interests can result in penalties, such as slashing, where a portion of staked assets is forfeited. 

Many newer blockchains, including Ethereum after its transition to PoS, use staking to reduce energy consumption while maintaining decentralized consensus.

What is crypto mining and how does it work?

Crypto mining is the process used by Proof of Work (PoW) blockchains to validate transactions and secure the network. Miners compete to add new blocks by solving cryptographic puzzles using computational power.

Mining requires specialised hardware, such as ASICs or high-performance GPUs, which perform large numbers of calculations to find a valid solution. The first miner to do so earns the right to add the next block to the blockchain.

Mining is intentionally resource-intensive. The requirement to expend electricity and computing power makes it costly to attack the network, which is how PoW achieves security. As more miners join, the network adjusts mining difficulty to keep block production consistent.

Miners receive protocol-defined incentives, usually in newly issued tokens and transaction fees. Over time, some networks reduce issuance through mechanisms such as Bitcoin’s halving, which periodically lowers block rewards and increases competition.

Because of its hardware and energy demands, mining tends to favor participants with access to efficient equipment and lower operating costs.

Crypto staking vs. mining: Key differences

Staking and mining serve the same purpose: Securing a blockchain and validating transactions. But they do so using very different models. 

The table below summarizes the main distinctions.

Proof of Stake (PoS) vs. Proof of Work (PoW)

In PoW systems, security comes from computational effort. Miners compete to solve cryptographic puzzles and the cost of electricity and hardware makes it expensive to attack the network. 

The trade-off is that this security model consumes significant energy and can favor participants with access to large-scale infrastructure.

PoS secures networks through economic incentives and penalties. Validators must lock up tokens to participate and dishonest behaviour can result in those tokens being reduced or forfeited. This shifts the cost of attacking the network from electricity and hardware to capital at risk.

These differences affect performance and design choices. PoS networks can generally process transactions more efficiently and with lower energy use, which is why many newer blockchains adopt PoS as a way to balance decentralization, scalability, and operational cost.

Hardware, software, resource requirements

Mining requires substantial physical infrastructure. Depending on the network, miners may use GPUs or specialized ASICs, along with dedicated power supplies, cooling systems and sufficient space to operate hardware continuously. 

Over time, there are instances where hardware can become obsolete as mining difficulty increases or more efficient equipment enters the market. This requires constant reinvestment and maintenance.

Staking has fewer physical requirements. Participation typically involves running validator software or delegating tokens through supported services. While validators still need reliable internet connectivity and system uptime, staking does not require specialized mining hardware or large-scale energy consumption.

Rewards mechanisms and distribution models

In mining, rewards may exist in the form of newly issued tokens and transaction fees. Miners compete for these rewards and only those who successfully add a block receive them. This creates a winner-takes-most dynamic – those with scale and efficiency would have an edge.

Staking rewards are generally distributed more predictably, based on protocol rules such as the amount staked, validator performance and network participation. Rather than competing through computation, validators earn incentives by remaining active and following consensus rules.

Accessibility and ease of entry

Mining often requires substantial upfront investment in hardware and it incurs hefty utilities costs. Technical knowledge to configure and maintain equipment is also among the pre-requisites. These barriers can make mining impractical for those without scale or specialized equipment.

Staking lowers some of these barriers. Participation depends on holding the required tokens and meeting protocol conditions, with options to delegate tokens rather than run infrastructure directly. 

While staking still carries risks and requirements, it tends to be more accessible for users without technical or operational setups.

Scalability and network efficiency

Scalability refers to how well a blockchain can process transactions as usage grows.

PoW networks emphasize security through computation, but this can limit throughput and increase costs as demand rises. Scaling solutions often require additional layers or off-chain mechanisms to improve efficiency.

PoS networks can be designed to process transactions more efficiently at the base layer. As validation does not rely on energy-intensive computation, PoS systems can support higher throughput and faster confirmation times, depending on network design.

Environmental impact

It’s well documented that the amount of electricity consumed in crypto mining is so large that it can rival that of small nations. The environmental footprint of mining depends on factors such as hardware efficiency and the source of electricity used.

Staking consumes significantly less energy because it doesn’t require continuous computational work. Validators rely primarily on standard computing resources and network connectivity, which reduces overall power consumption. 

This difference is a key reason why many newer blockchains adopt PoS as a more energy-efficient alternative.

Crypto staking vs. mining: Pros and cons

Staking vs. mining: Which is better for beginners?

There’s no single answer to whether staking or mining is better for beginners as the choice depends on the resources available to the individual.

For many newcomers, technical comfort and tolerance for operational complexity present mining hurdles to overcome. 

Understanding mining economics also involves tracking difficulty adjustments, hardware efficiency and operational costs.

Staking is generally less technically demanding. Participation requires holding the relevant cryptocurrency and meeting protocol conditions, with options to delegate tokens rather than run infrastructure directly. While staking still involves risks – such as lock-ups, validator performance and protocol changes – it usually involves fewer moving parts than mining.

That said, accessibility doesn’t remove responsibility. Beginners exploring either approach benefit from thorough understanding how networks operate, how participation affects assets and the varying risks across different protocols. Learning and preparation tend to matter more than choosing one model over the other.

How to get started with crypto staking on Crypto.com

For those interested in staking, Crypto.com serves as a gateway to explore PoS networks and understand how to participate, in simple terms.

Here’s what you can expect when staking in the Crypto.com App:

• Browse supported PoS assets and staking options. The ‘Staking’ section of the app lets you see which PoS‑based assets are supported and review staking details for each one, including estimated reward rates and protocol‑specific timelines.
• Clear terms and key conditions up front. Before you confirm a stake, the app shows the estimated APY, any activation or unbonding periods and requires you to accept the Staking ‘Terms & Conditions’ and ‘Privacy Notice’, with rewards ultimately determined by each underlying blockchain protocol.
• Educational resources in Learn Hub and Help Center explain how crypto staking works at the protocol level, including concepts like validator rewards, compounding and network‑driven lock‑up rules, for users who want more than just surface‑level definitions.
• Network- and region‑specific participation models. Staking behavior can differ by asset and product; some networks use liquid or delegated staking, while others rely on fixed‑term or DeFi staking structures. Supported tokens, terms and yields can vary by jurisdiction and certain regions or user types (e.g., non‑accredited investors in some markets) may not have access to all staking features.

As with all staking products, eligibility, supported assets and reward structures are subject to change and may differ depending on where you live and which version of the Crypto.com App you use.

Step-by-step guide to staking on Crypto.com

1. Open the Crypto.com App and complete the sign‑up and KYC processes.
2. Deposit or buy a supported token.
3. Tap ‘Menu’ → ‘Staking’
4. Select the token you want to stake.
5. Tap ‘Stake’ and enter an amount.
6. Review APR, activation and unbonding info, accept terms.
7. Tap ‘Confirm Stake’, then authorize with passcode, face or touch ID.
8. Check status and rewards under ‘Menu’ → ‘Staking’ → ‘My Portfolio’.

Key risks and considerations before participating

Although the mechanics are transparent in both staking and mining, outcomes can differ from expectations depending on market conditions, protocol rules and external factors.

1. Market volatility

Both staking and mining expose participants to cryptocurrency price movements. Even if participation continues uninterrupted, changes in the market value of the underlying asset can affect overall outcomes. Volatility may also influence network activity and participation incentives.

2. Protocol and network changes

Protocol upgrades can alter staking requirements, validator rules or reward structures, while mining networks may adjust difficulty or issuance schedules. These changes are decided at the protocol level and can affect participants without prior notice.

3. Validator and performance risk

In staking systems, outcomes depend partly on validator performance. Downtime, misconfiguration or rule violations can lead to penalties or reduced participation outcomes. For users who delegate tokens, this introduces reliance on third-party operators.

4. Smart contract risk

In staking systems that rely on smart contracts, participation may involve interacting with on-chain code that automatically enforces rules. If a smart contract contains a flaw or behaves unexpectedly, it can affect participation outcomes.

While many protocols undergo audits and testing, smart contract risk cannot be fully eliminated. Once deployed, contracts typically operate as written, without the possibility of manual intervention.

5. Regulatory uncertainty

Rules governing cryptocurrency participation vary by jurisdiction and continue to change. They may affect which assets are available; in some instances for mining, miners have faced restrictions or outright bans due to energy usage concerns. For staking, there may be different tax treatments for rewards received, depending on the region.

FAQs about crypto mining vs staking

What is the difference between crypto staking and crypto mining?

Staking and mining are two ways blockchains validate transactions and secure their networks. Staking relies on locking up tokens in Proof-of-Stake systems, while mining uses computational power and electricity in Proof-of-Work systems. Both serve the same purpose but operate very differently.

Is staking more energy-efficient than mining?

Staking generally consumes far less energy than mining. PoS networks don’t require continuous computational work, whereas PoW systems are designed to expend electricity as part of their security model.

Can beginners participate in crypto mining?

Mining can have high barriers to entry for beginners due to the need for specialized hardware, access to affordable electricity and ongoing maintenance. While participation is open, the practical barriers are often higher compared to staking, which only requires an internet connection and a mobile device.

Do all cryptocurrencies use staking or mining?

No. Some blockchains use PoS, others use PoW. Some use alternative or hybrid consensus mechanisms. The choice depends on how the network is designed and what trade-offs it prioritizes.

Is staking or mining safer?

Neither staking nor mining is inherently ‘safer’. Each involves different risks, including market volatility, protocol changes, operational issues and regulatory considerations. The type and level of risk depend on the network, the method of participation and external conditions.

Why are more blockchains moving toward Proof of Stake?

Many newer blockchains adopt PoS to reduce energy consumption, improve scalability and lower participation barriers. PoW remains valued for its simplicity and long track record in securing major networks.

Important Information: This is informational content sponsored by Crypto.com and should not be considered as investment advice. Trading cryptocurrencies carries risks, including price volatility. Past performance may not indicate future results. There is no assurance of future profitability. Consider your risk appetite before trading cryptocurrencies.

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