Approximately every 3.5 seconds, the Poisonous Hole will release a toxic cloud of gas, which will Poison the player or any Mob standing too close when this happens. The player can protect themselves from being poisoned by Poison Holes by wearing a Particulate Purifier. WX-78 does not require a Particulate Purifier for protection, since he's immune to Poison.
When a Poisonous Hole is dug up with a Shovel, it will be destroyed in the process and has a 50% chance to drop either a Venom Gland or Rot. Once a Poisonous Hole has been dug up, it will not return.