The Crystalarium will replicate any inserted gem or mineral except Prismatic Shards. (In the Museum there is a book that states: "For some reason, the EMF from the shard interacts negatively with the crystalarium"). Once inserted, it will replicate that item an infinite number of times. Once a gem or mineral has been inserted into the Crystalarium it cannot be removed, only replaced with another. The original item is lost and so it is best to let it finish at least once to avoid loss.
No one knows how these form. Some scientists claim that the microscopic structure displays unnatural regularity.
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Trivia
One of the two most profitable gems to grow for money is Diamond at 150 gold per day assuming the player harvests the gem as soon as it is ready (5 days).
The other (and technically most profitable) is a gold star-quality Fire Quartz at 166.2 gold per day, but considering the hours between 2am and 6am are inaccessible without taking advantage of a glitch, the gems cannot normally be harvested every 22 hours. Instead it also stands at a normal value of 150 gold per day, giving it the advantage that you can earn gold daily over waiting 5 days for diamonds.
Putting Quartz in several Crystalariums is one of the most efficient ways to obtain Refined Quartz, due to it only taking 7 hours to produce.