Is Bitcoin Halal Series: Mining - Is Bitcoin Mining Halal or Haram?
Audio length 33:32 minutes and 46 seconds.
You'll see the "comments" link right under the blog title.
- General opinion on Bitcoin mining by our scholars
- Hardware you can use to mine Bitcoin and the reality of making a profit
- Cloud Mining
Videos to review
- DIY Bitcoin Mining: Hardware (part1)
- DIY Bitcoin Mining: Software (part 2)
- Raspberry pi and GekkoScience Compac USB Stick Bitcoin Miner 8gh/s+ (BM1384)
- Working USB Bitcoin Farm with Raspberry Pi running Minera
- Bitcoin Mining in July 2017 - Still Profitable?
- Bitcoin ETFs, Bitcoin growth & Scalability - Andreas Antonopoulos
- 3 Reasons Why You Should Not Cloud Mine
So let's hop into that real quick today. Okay, now as we covered in the first and second blog post that we had. Number one, currency. We mentioned that the fuqaha as of yet have not classified Bitcoin as money. In our second blog post when we talked about trade when mentioned that, when it comes to trading Bitcoin, Bitcoin is not subject to rules of riba al buyu. So the rules of trade don't really apply to Bitcoin. Again, because it doesn't fall into the categories we talked about. And if you haven't read that blog post, if you haven't caught that video, go back and check them out. Again, check out the first one that talks about currency and the second one that talks about trade. We got into a little bit in regards to showing you the different categories and classes of trade- of items of trade that the fuqaha broke them up into classes- and we talked about that and what that means in regards to rules that apply to trade to items that fall into those categories. So, again, go back and check that out.
So with that being said, we're going to get into Bitcoin mining. So with Bitcoin mining people are always asking, "hey is mining for Bitcoin halal or haram?" So, as we mentioned, Bitcoin in and of itself is not haram. So the fuqaha have not unanimously, there is no mashoor (popular), there is no consensus that Bitcoin in and of itself is haram. It's more of a wait-and-see approach with the fuqaha and to exercise caution when you’re using it. And also, it seems like it's also more about paying attention to the law of the land of the country where you live in; seeing if Bitcoin in your particular country is legal to use or not. But when it comes to Bitcoin mining, Bitcoin mining in and of itself, we cannot say that it is haram. Now, there are some things that you should pay attention too. So, I'm going to look at mining from two different perspectives. The first one being mining for Bitcoin yourself; meaning, you purchased the hardware. You joined a mining pool and you're mining Bitcoin or any other alt coin that's out there. And the second one is cloud mining. And I actually did a video, a blog post, on cloud mining. So that's out there for you to check out as well. So, let’s go ahead and first let's talk about Bitcoin mining. I'm sorry- mining yourself.
First thing I want to talk about is, if you want to get into Bitcoin mining there’s some things that you probably want to pay attention too; certain equipment that you want to take a look at. So, I’m going to go ahead and share with you some equipment that you may want to take a look at. I’m pretty sure some of you out there have already done some research on this. Some of you have contacted me through my website here and let me know that you’re new to Bitcoin. So, if you’re new to Bitcoin this probably will be even more [of] benefit to you. In the hopes that we won’t have you wasting time or money. So, I want to talk about some equipment that you should look at. Some things to think of and then I also want to touch on Bitcoin mining when it comes to cloud mining because there are some concerns there that I think- where you have to pay attention to the sharia in regards to cloud mining. So, Let me go ahead right now and let’s go ahead and hop into mining on your own with hardware that you have either purchased or rented so let’s go ahead and take a look at that right now.
Okay, so, for those of you thinking about mining Bitcoin at home I wanted to share with you hardware that you should look at. So, this is a really good video where this guy, his name is Fred, he's going to show you an inexpensive way to set up a mining rig at home that's not going to break the bank. He's going to use Bitcoin miners that are USB sticks. Now one thing I want you to pay attention to is, look at the date as to when this video was published in 2013. That's old. That's old. So we have to keep in mind that the Bitcoin, the hash rate on the Bitcoin network has gotten much higher. It's increased dramatically since then. So, keep that in mind when you're looking at videos on YouTube that talk about setting up mining rigs for yourself at home. You want to keep in mind, look at when the video was made. Look at the products that they're using. It's really important. You have to be able to make sure that whatever you purchase is going to be well worth the investment.
So, let me go ahead and - let's make this big here. Let's close here. Press play. I'm going to fast forward here. Handsome young gentleman right there but we're going to fast forward. All right, so, here's the setup. Here's the setup. So if you look over here to the left you're going to see the Raspberry Pi 3. This is going to be your mini-computer. This is going to be the casing to protect this Raspberry Pi. I highly recommend to have a protective case for it so this way - it's so exposed that you don't want something to fall on it or you drop it or you, God forbid, you step on it by accident. So you want to have a protective case for your Raspberry Pi 3. You want to have a fan because, your fan, that's going to keep your Bitcoin USB sticks cool. And this is going to be your USB hub. It's going to be your USB hub where you will go ahead and plop those suckers in right there. Plop in your USB mining sticks in order to mine. And this is going to be your memory card.
Now, one thing I will say is - let me go ahead and let the video play out here - one thing I will say is keep in mind that these Bitcoin Erupters, these are ASIC Bitcoin Erupters. These are no good in 2017. At the time of the making of this blog post these are no good. No bueno. No good. Don't get these. I don't think you're going to see any profit whatsoever with those. They're just not going to cut it nowadays. This video here is pretty much going to be him explaining to you, showing to you, the different hardware and he's going to get into showing you how to set up the hardware and he does a really really good job of that - Let me go ahead and fast-forward here. Let's see here. Again, getting into the setup - Here we go right here. Like I said, this is going to be just an excellent video overall. I mean, it shows you all the hardware equipment that you're going to need to use to build your own mini mining rig. You know, to build this rig isn't going to break the bank. You don't need to spend thousands of dollars. It's a great do-it-yourself little video on that so, I am going to include this in the show notes there. So you can go ahead and check this out. Let me go ahead and escape out of this video and pause it.
So, again, he just showed you a layout of what equipment to use, and I had mentioned that even though he was showing the Bitcoin Erupter - just again, just want to make, drive the point home, when it comes to this Bitcoin Erupter, you're going to see this out on the market. They are still selling this. Don't buy this. Don't buy it. You're not going to make any money with this. You're going to lose money. Don't buy this. Okay, this is old. 2013 video, old. The premise of the video, the equipment he's showing you how to set up is good. But this particular USB mining stick, that's past its prime.
So what do you want to look at? Let's go to this video here. This video, check out the date on this video. 2016. So now this is 3 years later. This video, I will also include this link in the notes of this blog post - let's go ahead and make this big here, close this. And I'm going to press play - alright so, in this video you're going to see again that he is also using a Raspberry Pi 3 as his mini computer. You can see there that he has the protective casing. You always want to make sure that you're going to protect your mini computer. You want to protect your investment. I want to go ahead and fast forward, to here - let me back up - there you go. So you can see right here, so this right here is going to be your Gekko 3. This is going to be the Gekko, I'm sorry the Gekko 3, the GekkoScience. The GekkoScience USB mining sticks. These are going to be superior to the Bitcoin Erupter. And as you can see here, this person also has a USB hub, a multi-port USB hub, and a fan because I'm telling you these suckers run hot. Blazing hooooot! HOT! So, again you can see now in 2016 we see that we are using the Gekko miners.
Let me show you another video here. This one here. Now look at the date of this video. This one was published in March of 2017. So this is this year. And - let me make the video, enlarge it here, close this out, press play - and I'm just going to sort of walk through this video here. He is also using a Raspberry Pi 3 still in 2017. This is still good to use and you can see here what he's showing you is his little farming set - let me pause the video - this is his USB board. He is using the GekkoScience USB Bitcoin mining sticks and obviously you can see the fan because again we said that this runs hot. When this sucker mines, it's really, really hot. And over to the left, I think at some point he's going to show you, he's showing you the, his mining sticks there and then over to - I think the left-hand side up here, you're going to see his power supply. So this is the power supply that he is using, but again I just wanted to show you these videos just so you can see the equipment, what these people are using.
Let me go back for a second here. So in this video, so this video I said this is going to be a great do-it-yourself tutorial on what hardware to use and how to put it together, that's part one. He also has a part two that's pretty good to check out as well. The part two is just a software - but this really gets into software meaning like Bitcoin wallets. What wallets to use. So they're good, again, the videos are old, but they still have value in them. There's still value in this.
So let me do this right now. Let me hop over to the Islam and Bitcoin website. I'm going to go over to the products tab and I'm going to click on mining. So let me click on that and that's going to bring up the mining page here and on this page you can see that this is where I have listed all the equipment that relates to Bitcoin mining. I did my best to put equipment on this page of quality. I only put equipment on this page that I thought would be worth it and disregarded anything else. So the top of the page you're going to see the Gekko USB mining stick. I go ahead and give you some background on it here so that you can read up on it. This is, like I said, it's going to be far superior than the Bitcoin Erupter that he was showing you in that older video there.
Here you're going to have your USB multi-hub-ports. That's where you're going to, you're going to use this to put in your USB mining sticks. This is a 10 port USB 3.0 hub. Down here this is a 12 port USB 2. I would go with this, I think this is going to be better, you're 10 port USB. Why? Because it's a 3.0. So the 3.0 is going transfer data faster. And I think that's going to help you when it comes to mining.
So let me scroll down here and this is going to be your Raspberry Pi, your mini computer. So you can purchase it on its own, on its own without the casing or you can go ahead and purchase it with the kit. The kit gives you everything you need. I totally, highly recommend if you are going to go this route just get the kit. Save yourself some time. Don't try to go out there and try to put things together piece-by-piece. You'll probably end up spending more money. This kit is going to give you the protective case, the power supply, your cables, your memory card, so you're going to be good to go if you go that route. So I would suggest doing that.
So, let me show you this video. Now this video, look at when this one is produced, Bitcoin Mining in July of 2017, so now we're pretty much caught up to present day. At the time of making this video, this blog post I should say, at the time of making this blog post, this video is still valuable for today. Now, why do I think this video is important? He is going to talk about - let me go ahead and make this big - this video, he is going to get into showing you different equipment to use for mining. So you see right here, he's going to get into the Antminer, the Bitcoin Erupter. He's going to mention just as I did that this no good to use. No good to use. So what I'm going to do now is - I want to fast-forward in this video to about here - he goes through some equipment, but the one that you want to pay attention to is when he talks about the Antminer S9. This is going to be your work horse. This is going to be the Bitcoin hardware, the mining product that is going to turn you a prophet insha'Allah. The price tag though is pretty darn high. Check out this video. Check out this video. He gets into all the analytics. He talks about your electricity costs, the price of the equipment, how much Bitcoin you going to earn per day. It's an excellent video and again I'm going to put these links in the notes of this blog post. So check that out.
Let me go back over to the website here and I'm going to scroll down just to show you on this page the Antminer S9. Here you go. Like I said, this is going to be the "big daddy". The big worker. Check out the hash rate. This thing is hashing at 13.5 terrahash. That is larger, bigger, than the hash rate of the Bitcoin Network right now. With that being said though, look at the price. That's a lot. $2,500 you may find it for $2,300. That's a big chunk. That's a big chunk. That's a big price to pay for that; however, insha'Allah, that is going to make you a prophet insha'Allah. That is going to turn you or profit. If you scroll down the page here you'll see that I also have the power supply for it. So you have the power supply for the Antminer S9.
So let's get into talking about the reality of making a profit. I'm not showing you all of this just because I want you to come to my website and purchase the equipment. If you do, great. Alhumdulilah. That would be wonderful. But I want to be honest with you. As your Muslim brother, your brother in Islam, we're supposed to be honest with each other. If you are looking to purchase the Gekko USB stick, keep in mind that this is not going to make you some huge profit. I don't want you to think that if you go ahead and get the USB stick and you go ahead and get your USB hub, you get your Raspberry Pi 3 and you put your mining rig together that you're going to all of a sudden just, alhumdulilah, you're going to make a $1,000 per month in Bitcoin. $500 per month in Bitcoin. That's not going to happen. It's not going to happen. Keep in mind that the hashing rate of these USB sticks are very low. So right here you can see that it says 8 gigahash. I think it goes up to 13. It's not going to be a lot. You could potentially lose money with this. I think you may just break even.
Some people, some people are able to make a profit with this but not everyone. And the people who make a profit with this they do so by tweaking, and I don't know how they do this, if some of you know please tell me. Leave comments in the blog post below. They are able to tweak their USB hub. I think they're able to tweak it so that they maximize the data transfer rate in this USB hub which then allows this USB stick to maximize its hashing rate. It can hash at a higher rate and transfer the data faster. Like I said, I really don't see you making a huge amount of profit with this. I don't want you to be delusional and have all these dreams and hopes that if you get this it's going to make you a lot of money off the bat. I think if you're just looking to get your feet wet with Bitcoin mining. You want to try it out on your own. You want to do it in a manner that is relatively easy then this is a good way to go, but know that you're probably not going to make huge profits. I think that you are probably going to make something in the realm of maybe $0.20 per day. $0.30 per day. It's not going to be hundreds of dollars.
If you live somewhere and you don't have to pay electricity costs even better. That's good. If you have to pay electricity then you have to figure out if you're going to lose money or not. Again, this is good if you just want to get your feet wet. This is good if you want to earn some Bitcoin, mine some Bitcoin, but you're not really concerned about making huge profits. There are some people out there who do make profits and they do so by tweaking, again, they are able to tweak their USB hub. But again, don't look at this as though you're going to make huge profits. You'll make some, you'll get Bitcoin, inshallah no doubt about it you'll get Bitcoin, but it won't be this huge, it's not going to be huge amounts. And the price for this, the price is really, let me see how much it is. The price to get into this if you want to mine with it. Here you go right here, so we can see here you're looking at about 70 US dollars. 69/70 US dollars to purchase a Gekko USB mining stick. If you see right here, look here, it says, you can go from 8.5 up to 15+ gigahash, gigahash speed and if you see here it says that your USB port must be set at a higher speed rate. It should be set above specs in order to hit that 15 gigahash rate.
So I think the people who are really making some kind of a profit, they are tweaking out their USB hub. Okay? All right. Again now, the way that you're really going to make some money is if you go the route of going for the [Antminer] S9. I don't think this is even released yet but the price tag is really high. I don't think that most people can afford this. I really don't think so. I know some of you out there do mine Bitcoin. You've contacted me and you've told me that you're doing it. I don't think everybody can afford $2,500 though.
So, that's all I wanted to show you in regards to the hardware. Again, I will post all the links there. Mining Bitcoin on your own from what I've seen there is nothing haram about this at all. You're purchasing the equipment, you're joining a mining pool, Bitcoin in and of itself is not haram. Mining, it's not haram. No one [scholars] said it's haram. So if you want to do this, give it a shot. Give it a try. Okay, so let's talk about cloud mining. I want to talk about cloud mining now.
All right, so now that we've finished covering Bitcoin mining as it relates to purchasing your own equipment, building your own mining rig, now we want to touch on cloud mining. Now, when it comes to cloud mining - let me go ahead and click on the blog tab here - now, I had published a blog post sometime back that was called, "Should I Cloud Mine?" - let me go ahead and click on this - "Should I Cloud Mine?" And in this blog post I covered my experience with cloud mining and I cloud mined with Genesis. So let me go ahead and lower the volume here just to show you that - let's see here. Where do I want to go? Let's try, is it here? We're just doing some guesswork here. So, let's wait for this to pull up, yes. So, in this blog post, again, I talk about my experience with Genesis Cloud Mining. It's a very thorough video that I produced. Very long, about 45 minutes long. I know, very long. But in the video I actually do cover my experience with a Genesis. As you can see here, I even get into showing you the daily payouts that I was paid from my cloud mining. Again, you get to see the dashboard. You get to see all inside my account. We talk about the pricing of the contracts. It's a very very thorough blog post. I definitely would say that you should go ahead and check that out.
But now as I've gained more knowledge in regards to how cloud mining works and my studies in Islamic Finance, I've now come to the conclusion that I believe that cloud mining is no good. And I do not recommend cloud mining and that led to a blog post that I published called, "3 Reasons Why You Should Not Cloud Mine." "3 Reasons Why You Should Not Cloud Mine." And the number one reason that I would say why you shouldn't cloud mine it because of what it's called "gharar". Gharar means uncertainty. Technically I believe it means deception but according to Islamic Finance when you are dealing in contracts, gharar is normally understood to mean uncertainty.
Now, when you purchase a cloud mining contract, there is no way for you to truly verify that the Bitcoin you are receiving is from that company actually performing any mining. There is no way for you to really authenticate, to verify that the Bitcoin that you are receiving or any of the alt coins that you are mining for. There is no way for you to truly authenticate that they are actually mining those coins and that the payout that you are receiving, that the Bitcoin that you are receiving, is actually from, actually from them mining. Now what's interesting is, don't just take it from me, there's a gentleman by the name of Andreas Antonopoulos - I'm going to turn up the volume here and just play for you a segment of this video that I published and you can always go back and check it out for yourself. You can check out the full blog post, the full video here. But I just want to play a portion of it for you so that you can see, you can see for yourself - if I can get it here. Come on. - All right, so you can see for yourself Andreas, his take on cloud mining. So we're going to play that right now.
"Yeah, 95% of cloud mining schemes are scams. They are straight up ponzi schemes and the reason is, there is no effective way to prove whether the money you're making comes from the mining share that you've invested in or simply from the money that the people after you are investing into the same scheme which is what a ponzi is. Cloud mining in itself is almost always a ponzi. I have not seen a single one that I would trust, yet, I've seen hundreds of examples of them collapse. So if they're making money from mining but they're not actually running any hardware, they're just putting some money in and money keeps pouring out every month, I would take a 95 to 5 percent bet on that myself that it's a ponzi scheme." ~ Andreas Antonopoulos.
All right, so there you have it. Now, what he touched on is what we would call gharar. And again with an Islamic contract, when you're doing business between two parties, there shouldn't be gharar in the contract. The element of gharar should not be in the contract. Now with that being said, I completely understand that the sharia does allow for some percentage, a small percentage of gharar depending on the circumstance. So what do I mean by this? I will share with you an example that was provided to me by my teacher. Now, let's just say you are a grocery store owner. You own multiple grocery stores and you are interacting with a farmer and you're purchasing barrels of apples from a farmer. So you're purchasing apples from a farmer and the farmer is selling you one hundred barrels of apples. And let's just say maybe each barrel weighs about 50 pounds and you're going to distribute these apples all across the different stores that you own throughout the city.
Now, what happens is, when you go to purchase those apples from that farmer, 9 times out of 10, most of the time, you are not going to open up all 100 barrels and check each and every single apple to make sure that all the apples are in good quality, that they're not rotted, that they're not damaged, or to even check to make sure that there are apples in the barrels. Realistically you are not going to do that. You may randomly check some barrels here and there, but most likely you're not going to open up each and every barrel and check every single apple, you're not going to do that. And the fuqaha realized that for sake of practicality, for sake of ease, you're not going to do this. So, this type of uncertainty is allowed. This is a slight uncertainty that is permissible.
However, you can argue that cloud mining is different. Cloud mining is different. You're not opening up, it's not like you're dealing in barrels of apples. You're giving money to someone trusting that that person is going to mine Bitcoin for you and there's no way for you to verify that the person is actually mining Bitcoin for you. You don't know whether they are doing that or just giving you your own money back in small proportions as Bitcoin and telling you that you are actually receiving Bitcoin from their cloud mining services. You simply just don't know. It's an uncertainty that is just there. At least I believe so.
So, just to wrap things up, when it comes to the question, is Bitcoin mining halal or haram? Generally speaking, we can say that there is nothing haram about it if you purchase your own mining rig and you have your own equipment or let's just say you are paying someone else to cloud mine for you but you actually can, maybe you can go to their house or their apartment and you can actually look at the mining rig itself and you trust this person and you know that you are actually receiving Bitcoins from their cloud mining process. However, when it comes to these organizations [companies] that are out there in other countries that you yourself, you can't visit their location, you have no way to verify whether or not you are receiving Bitcoin from their cloud mining services, this would be known, at least from my understanding, this to me seems to be gharar. And I do know that in Islamic Finance when you have a contract between two people, two parties, the element of gharar should not be there. So, that wraps it up for this blog post when it comes to, "Is Bitcoin mining halal or haram?"
Insha'Allah you found benefit in it. I ask that you do share this. Again, especially if you found benefit in it. So now we see that we've advanced in our series, the, "Is Bitcoin Halal? Series". The first blog post that we had dealt with currency, "Is classified as money according to the Sharia?" The second blog post we touched on trade. In this blog post we now touched on mining, Bitcoin mining. And in the next blog post that we have coming up we're going to touch on investing in Bitcoin, "Is Investing in Bitcoin Halal or Haram?" Please stay tuned to check that out. That blog post is coming up sooner than later insha'Allah and I just wanted to thank you for checking out this blog post today.