Is Crypto Mining Legal In India?


It is digital money, it is more secured, unlike real money. it is a medium of exchange. cryptocurrency is a secured transaction and it is secured by cryptography methods.

It converts a database into complicated codes using encryption techniques, which are difficult to crack without fulfilling specific conditions. these transactions are managed by the blockchain system which serves as a public ledger that records and store all transactions.

The most important feature of a cryptocurrency is that it is decentralized it is not regulated by the government unlike real currencies, they are controlled by the activity of their users.


Bitcoin was the first-ever cryptocurrency that was created in the year 2009. On November 1, 2008, a man named Satoshi Nakamoto (a tentative name whose existence is questionable) posted a research paper to an obscure cryptography listserv describing his design for a new digital currency that he called bitcoin. One of the core challenges of designing a digital currency involves something called the double-spending problem.[1]  after that some other cryptocurrencies also created like Litecoin, Ethereum, Zcash, Dash, Ripple, etc. but bitcoin started gaining popularity gradually. bitcoins are neither centrally administered nor regulated by any specific body like RBI.

Bitcoin is a currency that is not regulated by a bank and also not governed by a government institution anyone can deal with in it anonymously. Bitcoin is controlled by bitcoin network which is basically its users and anyone can become part of this network.

All the record of transaction of bitcoin is stored in the public ledger in a series to which we call blockchain.


Finance minister Arun Jaitley in his speech on the budget, released on 1 February 2018 stated that government can do anything to discourage or discontinue the use of bitcoin or other cryptocurrencies in India for criminal uses he also mentioned that India doesn’t consider virtual currencies as legal tender and instead they will encourage blockchain technology in payments.

He said, The government will take measures to eliminate the use of crypto-assets in financing illegitimate activities or as part of the payment system, the finance minister said. The focus, however, would be on the distributed ledger system or blockchain technology that allows organizations to record and authenticate transactions without the need for intermediaries.[2]

If we talk about the legal status of cryptocurrency (bitcoin) in India, the most recent position of it can be shown in the case of INTERNET AND MOBILE ASSOCIATION OF INDIA  V. RESERVE BANK OF INDIA by which the ban imposed on the trading of cryptocurrency by RBI in April 2018 by releasing a circular has been lifted. Reserve Bank of India had issued a few advisory guidelines concerning cryptocurrency activities existing in India in a circular titled ‘Statement on Developmental and Regulatory Policies

Let me state a few points here what RBI mentioned in its circular;

’.Paragraph 13 of the circular asked entities governed by RBI not to deal with – or give services to – any person or business organizations dealing with or transacting in virtual currencies. Additionally, it also asked these entities to end such ties – if any. As per RBI, the circular was issued in the public interest.[3]

This circular of RBI was challenged on March 4 2020 by INTERNET AND MOBILE ASSOCIATION OF INDIA.


Main Arguments of the appellant were ;

  1. The denial of banking access into a profession which is not prohibited under any law of the country is deemed to be a violation of Article 19(1)(g)of the constitution of India which states that all citizen have right to practice the profession of their choice.
  2. The power contained in the circular released by RBI regarding cryptocurrency lied outside the power of the RBI.

On the second argument made The Supreme Court held that the RBI was acting within its authority in issuing the circular for the fulfillment of objective it has under law to protect and safeguard the interest of the public at large, interests of depositors and also interests of the banking policy”. The Supreme Court stated that “Therefore, anything that might cause a threat to or have a bad impact on the financial system of India, can be regulated or prohibited by RBI, despite the said activity not forming part of the credit system or payment system.” As the circular was issued in the interest of the public at large, the depositors and in the interest of banking policy, hence, the Supreme Court rejected the contention that RBI acted outside its authority in issuing this circular banning cryptocurrency.

On the first point of argument made The Supreme Court upheld this contention by stating that “There can also be no quarrel with the proposition that banking channels provide the lifeline of any business, trade or profession.

” However, the Supreme Court drew a clear distinction between the three categories of persons those who trade in cryptocurrency as a hobby as opposed to those who engage in trading in cryptocurrency as their business/occupation. The Supreme Court held that the first category who buys and sells cryptocurrency as a mere hobby cannot base their claim on Article 19(1)(g) as it only covers trade, occupation, profession, or business. The Supreme Court further held that the second category of citizens those who trade in cryptocurrency cannot also claim that the circular had the effect of completely shutting down their businesses, as they could still continue trading in “crypto-to-crypto” pairs or use the currencies stored in their wallets to make payments for the purchase of goods and services to those who are prepared to accept them, within India or abroad. Therefore, it is only the third category i.e., cryptocurrency exchanges that suffered due to the circular, as they had no other means of survival if they were disconnected from banking channels.[4]

Though the RBI was held to be within its rights to issue the circular, the factor that led to the striking down of the circular was the lack of proof of the “proportional damage” suffered by RBI regulated entities in dealing with businesses operating in cryptocurrencies. The Supreme Court observed that the circular disconnected the banking sector from cryptocurrency exchanges despite the RBI not having found anything wrong with the functioning of these exchanges. It was also noted that before issuing the circular, the RBI did not explore the availability of alternative and less intrusive measures such as regulating cryptocurrency trading and cryptocurrency exchanges.[5]


Bitcoin mining is a process where the bitcoin transaction made is updated continuously into the public ledger or we can say blockchain. In this process, new bitcoin enter into the ecosystem. It is performed by high power computers which helps to solve the complicated mathematical algorithm.  The miner installs software for bitcoin, this software with the use of high power solve the complex mathematical problems. When a miner is able to mine a block of the transaction, in return they get rewarded in the form of bitcoin.


The legality of crypto mining is still under heavy discussion, it is yet not clear whether it is legal or not. In India cryptocurrencies are not regulated by the government, so far no regulatory has been made to deal with the virtual currencies.

But in the recent judgement of the supreme court of India, they have been lifted the ban on cryptocurrency which had been imposed by RBI in its 2018 circular, from this we can interpret that although the cryptocurrency is not unlawful in India and not regulated it is neither illegal nor legal.


In the latest judgement of supreme court lifting ban, imposed by RBI ON cryptocurrency, Supreme court hasn’t talked about legitimacy and genuineness of these virtual currencies and its exchanges in trade, it just decided that such trading activity is not unlawful.

Many countries have legalized and authorized crypto mining some countries have declared it illegal and many countries are silent on this issue of crypto mining that’s why their stance is still not clear yet. But if you are mining in a country where cryptocurrency is legal and regulated, one can continue to do mining.

As in India it is yet not regulated, supreme court just decided on it to remove the tag of is still not clear whether crypto mining is legal or not.

[1] THE oin-and-legal-position-in-india





This article is written by Eshita Mishra, 4th year student of B.A. LL.B at Amity Law School,Delhi (GGSIPU).

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