Each grave dug with a Shovel has a 10% chance to spawn a Ghost, otherwise the player gets a Gravedigger Item. If no Ghost is spawned, it has 10% chance to be an Amulet, otherwise it will be one of the remaining items with equal probability. Once dug, the grave will not respawn, and each world has a limited number of them.
Digging a grave takes 16% of your shovel durability (equivalent to 4 digging actions) or 4% if using an Regal Shovel.
Digging any type of grave in the game will result in the player instantly losing 10 Sanity points. (Only when the grave is completly opened)
Whether the grave yields a Ghost or Gravedigger Item will not affect the amount of sanity lost.
As of winter update this type of sanity loss was removed.