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Uzbekistan creates state-backed crypto mining zone with tax breaks
TL;DR
Uzbekistan has established a state-backed crypto mining zone in Karakalpakstan, allowing approved companies to sell mined assets on foreign platforms. The initiative includes tax breaks until 2035 and mandates that mining proceeds remain within the country's banking system.
Key points
- Uzbekistan creates a crypto mining zone in Karakalpakstan
- Approved companies can sell mined assets on foreign platforms
- Tax exemption for miners until January 1, 2035
- Monthly fee of 1% on mining income required
- Proceeds must stay within Uzbekistan's banking system
Mentioned in this story
UzbekistanKarakalpakstan
Uzbekistan has created a special crypto mining zone across Karakalpakstan under a presidential resolution signed on April 17, opening a supervised framework that lets approved mining companies sell mined digital assets on foreign platforms while keeping the proceeds inside the country’s banking system.
A presidential decree effective April 20 creates the “Besqala Mining Valley,” a special mining zone across the Republic of Karakalpakstan, where registered legal entities can carry out crypto mining, use a mix of power sources and apply for resident status through a new directorate under the republic’s Council of Ministers.
The framework gives miners in the zone the right to sell crypto assets obtained through mining on national crypto exchanges or foreign platforms, including through direct contracts, and to exchange them for other liquid crypto assets. Still, the opening comes with strict controls over how mining revenues move through the financial system, and proceeds from those sales must be transferred to bank accounts in Uzbekistan.
Tax breaks aim to lure miners
The decree also provides for a tax exemption through Jan. 1, 2035, while requiring them to pay a monthly fee equal to 1% of income from mining activity to the zone’s directorate. The resolution separately instructs officials to submit draft amendments to Uzbekistan’s tax code within two months.
The new decree adds to Uzbekistan’s recent use of special-zone incentives in Karakalpakstan to attract investment into a region that a 2025 United Nations Development Programme report described as having high poverty rates and limited industrial development.
The new framework also adjusts Uzbekistan’s earlier approach to crypto mining. In 2023, Uzbekistan’s National Agency for Perspective Projects (NAPP) issued a decree on licensing crypto mining operations, requiring firms to only use solar power to mine digital assets.
The new decree allows a wider mix of power sources within the zone, including renewable, hydrogen and grid electricity, with higher tariffs applied for grid usage.
Q&A
What is the Besqala Mining Valley in Uzbekistan?
The Besqala Mining Valley is a special crypto mining zone in Karakalpakstan where approved companies can mine and sell digital assets under a new regulatory framework.
What tax benefits do crypto miners receive in Uzbekistan?
Crypto miners in Uzbekistan are granted a tax exemption until January 1, 2035, but must pay a monthly fee of 1% of their mining income.
How does Uzbekistan regulate the sale of mined crypto assets?
Uzbekistan requires that proceeds from the sale of mined crypto assets be transferred to bank accounts within the country, ensuring strict control over financial transactions.
