According to a new decree signed by President Shavkat Mirziyoyev, Uzbekistan is launching a special region in Karakalpakstan called the Beskara Mining Valley, where cryptocurrency mining will be officially regulated and allowed under government regulations, and income from mining operations will be exempt from taxes until January 1, 2035.
The initiative aims to attract investment, expand the use of renewable energy and foster employment through regulated mining activities.
Mining is restricted to registered legal entities and is primarily aimed at the use of renewable energy sources such as solar power, although there are additional provisions allowing the use of other managed energy systems.
Licensing and supervision will be handled by government agencies supported by the state, and operational approvals will be managed by state agencies. Businesses can legally mine, trade, and convert crypto assets, provided all proceeds are routed through domestic banking channels.
Mining revenue in the region will be exempt from tax until 2035, but operators will have to pay a monthly fee based on their profits, and higher electricity rates if they use the national grid.
The rules also include strict controls to prevent illegal activity, requiring businesses and managers to pass background checks and comply with financial transparency laws.
How Uzbekistan got here
Uzbekistan’s relationship with cryptocurrencies is slowly escalating.
A 2018 executive order recognized digital assets for the first time and established a basic regulatory framework, but it came with heavy guardrails. Mining was initially limited to corporations using solar photovoltaic energy, and the regulatory stance was very cautious.
The country stood by for several years as neighboring Kazakhstan became a global hashrate magnet, only to see Kazakh authorities forced to crack down on unregistered “grey” miners and battle the stability of its power grid.
Uzbekistan studied its strategy and chose a deterrence strategy by requiring grid-connected miners to pay twice the standard commercial electricity rate.
With the launch of Besqala Mining Valley, that stance has changed with the introduction of a 15% electricity discount for registered miners and data centers.
