What's the difference between proof-of-work mining and staking?

Proof-of-work mining

Miners compete to solve computational puzzles, find blocks, and earn rewards. This requires significant electricity and hardware. Bitcoin and similar coins use this method. Mining is open to anyone with equipment.

Staking (proof-of-stake)

Instead of solving puzzles, validators lock up coins as collateral and are randomly chosen to create blocks. Rewards go to stakers proportional to coins locked. Ethereum transitioned to staking in 2022. Staking requires minimal electricity—just running a node computer, often a laptop or small server.

Profitability comparison

Staking usually requires holding a minimum amount of coins (sometimes substantial). Returns on staked coins are typically 3–20% annually depending on the network. Mining returns depend heavily on electricity cost and hardware price. Neither is inherently more profitable—it depends on your circumstances and the specific coin.

Accessibility

Mining requires upfront hardware investment but no coin holdings. Staking requires owning the coin already. For most people with limited capital, staking a few coins you already own is easier than buying mining hardware. For those with cheap electricity and technical skills, mining might offer better returns.

Environmental difference

Staking uses drastically less electricity—roughly 99.9% less than proof-of-work mining. For environmentally concerned miners, staking is the better choice where available.