ELI5 What is geomining? [Cryptocurrencies]

ELI5 What is geomining? [Cryptocurrencies]

Geomining is a cryptocurrency consensus mechanism where the participants’ geographic locations are used as a proof of value.

Though the concept may seem vague at first, it is actually very powerful, especially in cryptocurrency networks where users’ locations are important.

Let’s take a look at  a practical example to try and make the concept clearer.

Geomining XYO Cryptocurrency

XYO is a San Diego, California based project that aims to build a network of devices that collect and check geospatial information in an anonymous fashion.

XYO stands for XY Oracle. The XY component indicates the network’s geospatial-related functionality, alluding to X and Y coordinates. O stands for Oracle – a mechanism which is able to link real world objects to blockchain entries.

By linking geospatial data to the blockchain via an oracle, XYO is able to offer geomining capabilities – attributing value to your geographic location.

To achieve this, XYO offers several products including software SDK’s, specialized hardware and so called Diviner interfaces which analyze data collected by XYO Network.

The XYO Explore Diviner allows you to analyze data collected by the Network.

XYO Sentinel devices (pictured left) allow for precise and trustworthy geospatial data collection for analysis on the XYO network.

XYO Introductory Video – What is geomining?

Visit the XYO Foundation website for more information.

Geomining Geon Coin

For example, in the Geon Coin network, users’ location is used to mine cryptocurrency.

When located near a Geon (a virtual beacon that points to a specific area of the Earth), a user will start “mining” Geons. A trusted device such as a wearable gadget is used to provide secure data about a user’s geolocation.

This works because the value of the network depends on users being at certain locations at certain times.

In other words, proving that you are at a certain location at a specific time provides value for the network. This value is then shared with the miner, who gets rewarded with an amount of Geon Coins.

How is Geomining commercially viable?

There are many use cases for geomining.

For instance, if a merchant would like to crowdsource customers for the inauguration of a new restaurant or shopping mall, then volunteers could use a geomining app to receive rewards for being present at that specific location during the launch party.

A trusted geolocation device, or even your mobile phone using a secure application, could provide Proof of Location by notifying a smart contract that you’ve been at a certain place.

Alas, if a music band needed to film a music video with lots of voluntary participants (like Nirvana’s Smells Like Teen Spirit!), the actors could be recruited in a fully decentralized manner by simply broadcasting the time and place of the filming. Everyone who showed up would receive cryptocurrency as an incentive for being there.


We hope this brief intro to cryptocurrency Geomining has given you a better idea about how the concept works.

While we’re used to seeing large installations full of Bitcoin miners crunching numbers 24×7, geomining presents a novel way to provide value to a cryptocurrency network that does not spend as much energy and is more ecologically sound.

We could see many innovative applications using this concept in the coming years, especially as the immense energy spent on Proof of Work comes under more scrutiny.