Instamine

November 21, 2023 - Around 2 mins mins to read

What is Instamine?

Instamine is the term used to describe the process of mining a large portion of a cryptocurrency project’s mineable coins or tokens within a short period of time. This leads to the rapid and uneven distribution of these digital assets among investors. Unlike Bitcoin, which gradually releases its supply until 2140, instamining involves a compressed timeframe for mining.

During an instamine period, a significant amount of the digital asset becomes available early on when there is typically higher investor demand. This can result in a substantial increase in the cryptocurrency’s supply and a subsequent decrease in its price.

Instamining can occur either intentionally or accidentally due to flaws in mining algorithms. Some newly launched cryptocurrencies may incorporate instamining as a strategy to attract investors by offering easy mining opportunities.

It is important to distinguish instamining from pre-mining. While both processes involve generating a coin’s supply before it becomes available to the public, pre-mining occurs entirely before the launch of the digital currency.

There are concerns surrounding instamining, with some analysts associating it with fraudulent activity and unfair competition. For instance, when Dash was launched, it faced issues with its mining difficulty algorithm, resulting in the issuance of two million coins (15% of its total supply) just two days after the launch. These coins were then sold at significantly lower prices, potentially impacting the cryptocurrency negatively.