An instamine is when a large portion of a cryptocurrency’s future supply is mined and issued to one or more addresses. This is typically due to malicious coding by the coin’s developers or a problem with the cryptocurrency’s mining difficulty. This opposes the common gradual release of tokens in a consensus protocol like proof-of-work (PoW). An instamine often leads to an unfair or unequal distribution of coins among developers or founders of a project.
Most cryptocurrency projects which undergo an instamine share a large portion of their coins early to investors during periods of high interest in the project.
Real-World Example of an Instamine
One of the most popular instances of instamining took place after the launch of Dash. The algorithms which were supposed to adjust the mining difficulty for Dash did not work as planned. Due to that error, about 2 million coins were distributed in the two days after Dash was launched.
As the supply of Dash overwhelmed investors, most coins were sold at low prices across various exchanges, Since it wasn’t a single seller who dumped a large holding of Dash coins, the impact wasn’t huge in the crypto market.
Instamining vs. Pre mining
Instamining has been often used interchangeably with remaining. They are different concepts. Instamined coins are easily mined after launch either deliberately or by accidental programming events. Premined coins, on the other hand, have been developed before the launch of the coin.
Most cryptocurrencies are premined to a certain controlled extent by developers who want to keep a share of the coin supply when it launches.