Your players have an interesting definition of fun(d). Wait...gold...that actually works...
Ha! A typo that works.
I think they will start leveling up quite quickly when they begin mining XP.
Well, "quickly" is a bit subjective when talking about leveling up. I would say that we level up much much more slowly than what is typical for 5e with standard XP. The campaign has been running three years and eight months as of this month and with the XP from the this gold vein the PC will hit 17th level. What is interesting about this campaign is that leveling is very swingy and unpredictable. You can defeat a powerful foe who has little or no loot. Occasionally, you'll come accross something of great value that requires almost no combat challenge (other than the weeks or months of in-game time exploring and surviving the dungeon).
What I like about this is that it rewards multiple styles of play. The exploration pillar, planning, and avoidance can pay bigger dividends than taking on every powerful foe you come across or learn about. As an example, to get to the point where the party was able to extract this gold for XP involved a party of mostly 16th level PC and little over 24 hours of play over three months, with downtime activity and preparation in between. The original goal wasn't to extract the gold. They didn't know about the gold at first, and could have easily missed it. They discovered this set of caverns through exploration and learned that it let to an entrance to subterranean city of Orcus-worshipping goblins that they have been working on defeating since tier one levels and for over two years of play. Their goal was to clear out the powerful guardians of this level and set up a force to further isolate the city and cut it off from supplies and as a base of operations to capture the city once and for all.
I like how these are now very powerful PCs, who started at level zero, based in a small backwater river town, took over a nearby ruined castle after clearing out the goblins who were using it as a base of operations for raiding that town. They repaired and improved the castle, set up establishments, and slowly built a town around them. That town being mostly the families of troops they've attracted and hired, all in support of defeating and clearing out a nearby dungeon and stronghold of followers of Orcus. This all requires funds. Lots of funds. I like how gold actually means something in this campaign. It helps drive the story. I just makes sense that it is tied to experience and leveling.
My first two campaigns did not use XP for GP. My first used milestone leveling. My second used a kind of hybrid system where the PC got points for a mixture of places explored/found, mcguffins recovered, and enemies defeated. All three approached have been more satisfying to me than that standard XP for defeating monsters and challenges.
Here's what I want to know: how much faster does a +1 pickaxe cut rock?
Not sure. I would highly abstract it by giving percentage improvements. I'm thinking I would rather reduce the costs (equipment is more durable) and maybe a small improvement to mining times (better equipment is a bit more efficient, but a lot of that due to less time on maintenance). But I'm not sure the cost of enchanting weapons is worth the increased speed. Spells are more interesting and a bit more complicated to determine how much they would improve things. Also, could some of the spells actually ruin the metal? And again is it worth the cost?
And this follows, sort of: which king is going to allow mages to enchant weapons when they could be enchanting infrastructure instead?
In my campaign, a lot is spent on infrastructure. Especially in building. It is abstracted using the Strongholds and Followers Rules, but part of how I explain why that build times are unrealistic when looked at from a strictly historical lens is the use of magic. Control flame, dancing lights, guidance, mage hand, mending, message, mold earth, prestidigitation, shape water, and spare the dying are all cantrips and would have profound effects on the efficiency and effectiveness of construction work. Depending on how much of a high-magic campaign your are running, even low-level spells would be well worth the cost to apply to important construction work: feather fall, floating disk, immovable object, create or destroy water, cure wounds, grease, healing word, unseen servant, alter self, enlarge/reduce, levitate, misty step, shatter, spider climb, etc. All of these would be game changers without having to get to 3rd and 4th level spells like fabricate, conjure minor elemental, daylight, fly, giant insect, haste, stone shape, summon elemental/construct, etc.