Is cryptocurrency mining considered halal or haram?

What Is Cryptocurrency Mining?

Cryptocurrency mining is the process of generating new coins on a blockchain network by adding blocks according to specific rules. Miners perform this task in exchange for rewards in digital currencies, which they may invest or benefit from if their value rises.

Bitcoin is the most prominent mineable cryptocurrency. Mining Bitcoin requires solving complex mathematical problems with substantial computing power. Miners can achieve this either by using specialized Bitcoin mining hardware or by joining cloud mining pools, which provide collective computing resources.

Is Cryptocurrency Mining Permitted or Forbidden in Islam?

The Islamic ruling on cryptocurrency mining is a complex and debated topic. Some scholars permit it as a paid service—verifying transactions for a reward—while others prohibit it due to the absence of a real-world asset backing the digital currency.

Ruling on Digital Currencies by the Council of Senior Scholars

In Saudi Arabia, the Council of Senior Scholars has not issued a definitive fatwa regarding cryptocurrency mining or trading. However, some members have shared personal views. Sheikh Abdullah Al-Manea, a council member, considers digital currencies prohibited due to several factors: they are not exchanged directly, lack gold or silver backing, may involve usurious transactions, and are issued without government oversight.

At Al-Azhar's Council of Senior Scholars, several experts and economists have discussed cryptocurrencies and mining in seminars and fatwas, warning that these activities involve significant economic and religious risks, including excessive uncertainty, lack of knowledge, and absence of financial or legal regulation.

Bitcoin Ruling – Islam Q&A

The Islam Q&A website stated in a previous fatwa that Bitcoin transactions are surrounded by ambiguity and risk, making investment in Bitcoin religiously inadvisable until its nature and provenance are clarified. Another fatwa on the site addressed cryptocurrencies more broadly, concluding that trading is permissible provided religious conditions are met—such as immediate exchange and actual ownership—while avoiding prohibited practices like margin trading.

Cryptocurrency Mining Ruling – IslamWeb

IslamWeb noted in a fatwa that companies involved in Bitcoin and crypto mining face several religious challenges related to the origin of these currencies. The Islamic Fiqh Academy, affiliated with the Organization of Islamic Cooperation, has discussed the issue in scientific seminars and confirmed that key legal questions remain unresolved.

Digital Currency Ruling by Ibn Baz

Sheikh Abdul Aziz Ibn Baz—may Allah have mercy on him—did not issue any fatwa concerning digital currencies or mining, as he passed away before the technology emerged. Nevertheless, his approach to financial matters always emphasized the importance of seeking what is lawful and avoiding transactions involving excessive risk, usury, or harm to Muslims.

Is Cloud Mining Permissible?

Recent Islamic legal research shows that cloud mining is a form of digital investment for acquiring cryptocurrencies, and its religious status depends on its type and method.

Hosted or virtual cloud mining resembles a lease agreement for hardware or servers. Miners pay an intermediary to use mining devices or servers, which is considered a permissible arrangement.

Cloud mining that uses hash power operates as a business partnership in lawful activities and is also permissible according to the preferred opinion, provided religious requirements are met.

Scholars agree that cloud mining becomes prohibited if linked to suspicious practices, such as pyramid schemes, dubious referrals, or contracts lacking transparency and fairness in profit distribution.

Legal studies clarify that cloud mining is permissible if it meets these religious criteria:

1. Clear identification of contract type (lease or partnership).
2. Transparent financial details and returns.
3. Avoidance of pyramid schemes or unclear systems.
4. Verification of the counterparty’s integrity and fair profit distribution.

Cryptocurrencies: Permissible or Prohibited?

The religious rulings on cryptocurrencies and mining show varied opinions about their permissibility, based on specific criteria and conditions. As a result, scholars have not reached consensus to permit or prohibit all cryptocurrencies; instead, some advocate reviewing each digital asset individually according to its nature, project, and compliance with religious guidelines.

Is Bitcoin Mining Permitted or Prohibited?

Contemporary scholars are divided on Bitcoin. Some prohibit it due to its risks, unclear origins, and lack of official guarantees, likening it to gambling. Others permit it if treated as a tradable commodity. Several religious authorities—including fatwa organizations in Egypt, Jordan, Kuwait, Turkey, the UAE, Qatar, and members of Saudi Arabia’s Council of Senior Scholars—have issued rulings prohibiting Bitcoin transactions.

Their reasoning includes:

• The currency is virtual and not issued by any official guarantor, which exposes users to financial loss risks.
• It promotes gambling and speculative trading, allowing uncontrolled creation of new coins without religious or economic safeguards.

Because most fatwa authorities lean toward prohibition, Bitcoin mining is also considered impermissible under Islamic law.

Is USDT Permitted or Prohibited?

According to the Islamic Union Association, the digital dollar (USDT) differs from Bitcoin and other cryptocurrencies; individuals cannot mine USDT, as it is issued solely by the US Federal Reserve or authorized entities and is subject to official oversight. USDT is essentially part of the fiat dollar, designed to facilitate faster transactions and trading.

Therefore, its religious ruling is the same as approved fiat currencies. Trading in USDT is permitted as long as it is officially licensed.

Is XRP Permitted or Prohibited?

XRP is the digital currency for the Ripple network, a global platform for fast, reliable payments and currency exchanges, verifying transactions between parties. Ripple provides legitimate services—such as money transfers, transaction funding, and currency conversion—with no evidence of suspicious or prohibited activities. Based on religious studies and scholarly opinion, there are no violations in using XRP, making it a permissible digital asset.

Is DOGE Permitted or Prohibited?

Research on Dogecoin (DOGE) shows it does not involve suspicious or prohibited services in its structure or use, making it a permissible digital currency. Some scholars believe DOGE can be owned or traded, provided general religious guidelines are followed—such as avoiding excessive risk and usurious transactions.

As for DOGE mining, its ruling aligns with other cryptocurrencies and varies from permissible to prohibited depending on compliance with Islamic legal standards.

Is Mining Usury or Investment?

Mining is fundamentally a legitimate investment when an individual rents mining power or uses their own equipment in exchange for a clear benefit (mining reward), similar to lease contracts approved by Islamic law, provided the transaction is free of excessive risk and usury.

Mining becomes usurious or prohibited in cases such as:

• Dealing with suspicious or unreliable mining companies engaged in fraud or lacking transparency.
• Mining digital currencies associated with scams, fraud, or direct usurious transactions.
• Joining fraudulent companies that use pyramid marketing or referrals, where investors pay for promised profits from future sign-ups.

Thus, mining may be classified as a lawful investment or prohibited usury, depending on the company, currency, and contract structure.

Is Cryptocurrency Trading Prohibited?

The same religious rules apply to trading cryptocurrencies as to trading any currency, provided the digital asset itself is permissible and free of religious prohibitions. Valid trading contracts require:

1. Real or constructive settlement of the contract.
2. Immediate execution of buying and selling without delay.
3. Profits for both the capital provider and trader must be a known percentage, not a fixed sum, as a fixed amount invalidates the contract.
4. The trader is only liable for capital in cases of negligence or misconduct.

Conclusion: Is Digital Mining Allowed in Islam?

Scholarly opinions differ on the legitimacy of digital mining. Some permit it as a lawful investment based on effort and reward, provided it is free from usury, excessive risk, and suspicious transactions. Others prohibit it due to the risks, uncertainty, and lack of official guarantees in cryptocurrencies. The ruling depends on the type of currency, mining mechanism, and compliance with Islamic legal standards such as transparency and avoidance of usury and gambling.

FAQ

What Is the Overall Islamic Position on Cryptocurrencies?

There is no unified Islamic stance on cryptocurrencies. Scholars disagree—some prohibit them, others consider them permissible. No country has banned digital currencies for religious reasons, so Muslim investors should consult scholars individually.

Is High Electricity and Resource Use in Crypto Mining Considered Wasteful under Islamic Law?

Mining uses resources efficiently to secure networks and verify transactions, representing productive investment rather than wastefulness. Islam encourages investment and socially beneficial production.

Do Islamic Schools of Thought (e.g., Shafi'i, Maliki) Differ on Mining?

Yes, Islamic schools differ in their assessment of mining. Shafi'i, Maliki, and others have varied interpretations, but the predominant opinion is that mining is permissible under certain conditions related to intention and fairness.

How Are Mining Profits Classified in Islamic Finance (Do They Involve Interest/Usury)?

Mining profits do not involve usury, as they are earned through lawful work. Islam prohibits usury as unjust gain, while mining is a productive and permissible activity under Islamic law.

If Mining Is Permitted, What Islamic Financial Requirements Must Be Met?

Usury, gambling, and prohibited practices must be avoided. All contracts should comply with Sharia law, ensuring operational transparency and adherence to Islamic ethical standards.

Do Islamic and Financial Institutions Differ in Their Official Position on Cryptocurrency Mining?

Islamic scholars have differing views on cryptocurrency mining. Some consider it a legitimate investment if it is transparent and free of usury; others prohibit it due to high risks and lack of tangible asset backing. There is no final consensus yet.

Is Mining Compatible with Islamic Principles of Honest Work and Resource Use?

Yes, ethical mining aligns with Islamic principles. Islam values honest labor and responsible resource use, which ethical mining requires. Mining should respect local communities and preserve the environment in line with Islamic values.