Uzbekistan has launched a state-supervised crypto mining zone in Karakalpakstan under a presidential resolution signed on April 17, marking a major step in its digital asset strategy.
Summary
Uzbekistan has established the “Besqala Mining Valley” to enable regulated crypto mining and foreign digital asset sales. Mining firms will benefit from tax breaks until 2035 but must route proceeds through domestic banks. The new policy also expands energy options beyond solar power.
Uzbekistan sets up Besqala Mining Valley
The decree, which came into effect on April 20, formally created the Besqala Mining Valley across the Republic of Karakalpakstan. The initiative allows approved companies to operate within a designated zone under state oversight.
Registered entities can apply for residency through a newly formed directorate under the region’s Council of Ministers. Once approved, firms can mine crypto assets, sell them on local exchanges or foreign platforms, and engage in swaps with other liquid digital assets.
However, the framework maintains strict financial controls. Companies must transfer proceeds from crypto sales into bank accounts within Uzbekistan, ensuring that funds remain within the country’s financial system—even if transactions occur abroad.
Tax incentives and investor push
To attract investment, the government is offering tax exemptions to mining zone residents until January 1, 2035. In exchange, companies are required to pay a monthly fee equal to 1% of their mining revenue to the zone’s directorate.
Officials have also been tasked with proposing amendments to the tax code within two months to align existing regulations with the new framework.
The move is seen as part of a broader effort to boost economic activity in Karakalpakstan, a region that has faced economic challenges, including high poverty levels and limited industrial growth.
Energy policy expands beyond solar
The new decree also marks a shift from Uzbekistan’s earlier crypto mining rules. In 2023, the government required licensed miners to rely solely on solar energy.
Under the updated framework, companies can now use a wider mix of power sources, including renewable energy, hydrogen, and grid electricity—though higher tariffs will apply to grid usage.
Part of a larger economic strategy
The mining zone aligns with Uzbekistan’s broader development plans for Karakalpakstan. In 2025, the government proposed a separate tax-free zone focused on artificial intelligence and data centers in the same region.
That initiative offers discounted electricity and significant tax incentives, with reports suggesting that investments of at least $100 million could qualify for full tax and duty exemptions until 2040. The country aims to attract over $1 billion in foreign investment from the project by 2030.
