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Profile image can be uploaded and cropped on edit profile page.
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Image cropping allow a profile image to look nice for different types of usage:
Small. Crop your profile image for your teaser - an overview block of you by clicking on which you can reach your profile.
Profile medium. Crop image for the top area in your profile as well as in your comment and activity stream.
Profile small. Crop image for your profile image in the header.