When a large portion of a coin’s total supply is distributed to investors shortly after launch.
Whereas Bitcoin’s supply is going to be gradually released between now and 2140, instamining involves a large portion of the total mineable coins or tokens in a project being mined in a compressed timeframe. As a result, they may be unevenly and quickly distributed to investors.
The process of instamining usually leads to a significant increase in supply of the cryptocurrencies, and a lower price.
Instamining may be deliberate — but it can also happen accidentally due to imperfections in mining algorithms.
Newly launched cryptocurrencies often offer special features to broaden its appeal to investors — and sometimes, this can make it incredibly easy to mine new coins.
Some cryptocurrencies have explored whether there should be an initial period for instamining to lure investors into buying the digital assets.
Instamining should not be confused with pre-mining, although both processes have similarities in common. Pre-mining means some, or all, of a coin’s supply is generated before the digital currency becomes available to the public.
Some analysts claim that instamining has been linked to fraudulent activity, while others allege it can lead to unfair competition, especially if many tokens are purchased by a big group and then sold at a significantly lower price.
This resulted in two million coins, or 15% of the cryptocurrency’s supply, to be issued two days after it launched.
Dash coins were then sold at very low prices. While the incident did not yield massive adverse consequences, instamining can severely impair cryptocurrencies.