Is digital mining permitted in Islam? A comprehensive guide for Muslim investors

Quick Introduction: Mining and Its Islamic Ruling

Cryptocurrencies have spread rapidly in the Muslim and Arab world, raising questions about their legitimacy and the permissibility of dealing with them. But the most important question that Muslim investors ask is Is mining forbidden or permissible? The truth is that the answer is not black and white as it seems at first glance.

Religious institutions and Islamic jurisprudence bodies have provided various interpretations, and different fatwas have been issued on this topic. Some have permitted it under certain conditions, while others have outright forbidden it. In this guide, we review the different jurisprudential opinions and explain the Shariah principles that determine whether mining is forbidden or permissible in the eyes of Islamic law.

What is Cryptocurrency Mining?

Crypto Mining (Crypto Mining) is the process of producing new coins by adding new blocks to the blockchain (Blockchain). Miners solve complex mathematical problems using high computational power, and in return, they receive rewards in digital currencies.

The most famous mineable currencies are Bitcoin (Bitcoin), which require solving very complex mathematical equations. Miners use specialized devices or join cloud mining pools that provide collective computational power.

Jurisprudential Opinions on Mining: Is it Forbidden or Permissible?

###Position of the Senior Scholars Committee in Saudi Arabia

The Senior Scholars Committee in Saudi Arabia has not issued a definitive fatwa regarding mining in general. However, some of its members have expressed personal opinions. Sheikh Abdullah Al-Munea, a member of the committee, has considered digital currencies as:

• Not traded in a real hand-to-hand manner
• Not backed by precious metals like gold and silver
• May involve usurious transactions
• Not issued by an official authority under the supervision of the ruler

###Position of Al-Azhar Al-Sharif

Al-Azhar scholars and the Islamic Research Academy have discussed the issue of cryptocurrencies and mining in multiple seminars. They concluded that these currencies involve significant economic and Shariah risks, including gharar (uncertainty), jahl ###ignorance(, and lack of financial oversight. Accordingly, Al-Azhar considers dealing with or mining digital currencies as not permissible in their current form.

)Position of Islam Question & Answer Website

The site clarified that dealing with some digital currencies may be permissible under certain conditions, such as:

• Immediate transfer of ownership (immediate delivery)
• Actual ownership of the currency away from prohibited practices
• Avoiding margin trading ###margin(

Based on this, the permissibility of mining digital currencies depends on the nature of the currency itself and whether it meets the Shariah conditions.

)Position of IslamWeb and the Islamic Fiqh Academy

The Islamic Fiqh Academy, affiliated with the Organization of Islamic Cooperation, discussed the topic in a scientific seminar. They confirmed that some fundamental issues remain unresolved:

• Are cryptocurrencies commodities, benefits, or recognized financial assets in Shariah?
• How to deal with sharp price fluctuations?
• What are the available Shariah guarantees?

The fatwa concluded that the final Islamic ruling on whether mining is forbidden still requires further research and in-depth study.

Cloud Mining: Is it Permissible?

Cloud mining (Cloud Mining) is entirely different from direct mining. Here, the miner rents computational power from an intermediary for a known fee. Recent Shariah studies issued by specialized Islamic colleges have shown that cloud mining is permissible if certain controls are met:

1. Clarity of the contract type: Is it leasing ###ijara### or partnership?
2. Financial transparency: Clear knowledge of returns and details
3. Avoiding pyramid schemes: Not relying on multi-level marketing or suspicious referrals
4. Verifying integrity: Ensuring the reliability of the company and how profits are distributed

(Cases where cloud mining becomes forbidden

Cloud mining becomes immediately forbidden if linked to:

• Companies relying on pyramid marketing models
• Lack of clarity in the mechanisms and contracts
• Unfair distribution of profits
• Complete lack of transparency

Are Certain Coins Permissible or Forbidden?

)Bitcoin ###BTC(: Predominant Fatwa of Prohibition

Contemporary scholars differ on Bitcoin. Several Arab and Islamic fatwa bodies have declared it forbidden, including:

• Egyptian Dar Al-Ifta
• Jordanian Dar Al-Ifta
• Kuwaiti Dar Al-Ifta
• Turkish Dar Al-Ifta
• UAE Dar Al-Ifta
• Qatari Dar Al-Ifta

Reasons for prohibition include:

• Bitcoin is a virtual currency not issued by an official authority
• Lacks real guarantees, risking users’ funds
• Leads to speculation and unlawful gambling
• Opens the door for issuing new currencies without Shariah or economic regulation

)Digital Dollar ###USDT(: Predominant Fatwa of Permissibility

USDT differs entirely from Bitcoin and other cryptocurrencies. It cannot be mined by ordinary individuals; it is issued by approved entities and subject to official oversight. It is essentially a digital representation of the US dollar, facilitating quick transfers and transactions. Its Islamic ruling is similar to that of a recognized fiat currency, and dealing with it is permissible as long as it is issued by licensed authorities.

)XRP (Ripple): Predominant Fatwa of Permissibility

XRP is linked to the Ripple network, a global payment settlement and currency exchange system that offers legitimate services such as:

• Facilitating international money transfers
• Financing commercial transactions
• Exchanging currencies quickly

No suspicious or forbidden activities have been proven in its structure or operation. Based on specialized Islamic jurisprudence opinions, there are no Shariah violations in using XRP, making it a permissible currency.

###Dogecoin (DOGE): Predominant Fatwa of Permissibility

Studies indicate that Dogecoin does not involve suspicious services or activities in its structure, making it permissible. It can be dealt with in terms of ownership or trading, provided that general Shariah principles are observed, such as:

• Avoiding excessive gharar (extreme risk)
• Staying away from usurious transactions
• Not causing public harm

However, some scholars advise caution regarding doubts and avoiding investment forms that are highly ambiguous or carry excessive risks.

Is Mining an Investment or Riba?

Mining originally is a legitimate investment activity if the following conditions are met:

• The individual rents mining power or uses their own equipment
• Receives a clear benefit (mining reward)
• The transaction is free from gharar and riba
• Full transparency exists in the contract

In this case, mining resembles permissible leasing contracts, based on effort and known reward.

###Cases where mining becomes Riba and forbidden:

1. Dealing with suspicious companies: companies engaging in fraud or lacking full transparency
2. Mining suspicious currencies: currencies linked to scams or usurious transactions
3. Pyramid schemes: companies relying on multi-level marketing where investors pay money only for promises without a real product

Speculation in Cryptocurrencies: Is it Forbidden?

(Trading) speculation has the same ruling as the currency itself. If the currency is permissible, then speculation is also permissible under conditions:

1. Actual transfer (Taqabud): immediate delivery and receipt (or legal)
2. Final sale: buying and selling are final without delay
3. No guarantee of loss: the speculator does not guarantee the capital unless through negligence
4. Known profit ratio: each party takes a known percentage of profits, not a fixed amount

Final Summary: The Ultimate Ruling

Is mining forbidden? The answer depends on two main factors:

First: the nature of the currency

• Official currencies approved by states (like USDT): permissible to mine
• Decentralized currencies without guarantees (like BTC): forbidden according to most fatwas
• Intermediate currencies (like XRP and DOGE): permissible under conditions

Second: the nature of mining

• Transparent mining with clear contracts: permissible
• Mining through pyramid or opaque systems: forbidden

Key point: Mining cannot be universally judged as forbidden or permissible. Each case is evaluated based on:

• Clarity of the mining mechanism
• Trustworthiness of the company or platform
• Nature of the currency being mined
• Compliance with Shariah principles (transparency, absence of riba, avoidance of gharar and gambling).

Frequently Asked Questions

Q: Is it permissible for a Muslim to mine any digital currency?

A: No. First, verify that the currency itself is Shariah-compliant, then ensure that the mining method is transparent and free from riba and gharar.

Q: What is the difference between direct mining and cloud mining in terms of Shariah ruling?

A: Cloud mining may be easier from a Shariah perspective if the leasing contract is clear, but verifying the integrity of the company is essential.

Q: Are there any cryptocurrencies 100% halal in Islam?

A: Official currencies issued by states or central banks (like USDT) are closer to permissible, but even here, adherence to Shariah principles in dealing remains necessary.

Q: If I am in a country that forbids cryptocurrencies legally, does that make mining also legally forbidden?

A: Obeying the official laws of the state is obligatory in Islam as long as it does not conflict with Islamic principles; thus, yes, it becomes forbidden.

Q: Can a Muslim deal with Western mining platforms?

A: Yes, as long as the platform is trustworthy, transparent, and deals with currencies that are Shariah-permissible. Nationality is not a Shariah criterion; transparency and integrity are the foundations.