Uzbekistan launches tax-free crypto mining hub to attract foreign investment

Uzbekistan is launching a special area in Karakalpakstan called “Besqala Mining Valley” where crypto mining is officially regulated and allowed under government rules, with income from mining operations exempt from taxes until January 1, 2035, according to a new decree signed by President Shavkat Mirziyoyev.

The initiative aims to attract investment, expand renewable energy use, and boost employment through regulated mining activities.

Mining is restricted to registered legal entities and is mainly intended to use renewable energy sources such as solar power, with additional provisions allowing the use of other controlled energy systems.

Licensing and supervision will be handled by a state-backed administrative, while operational approvals will be managed by a national agency. Companies can legally mine, trade, and convert crypto assets, provided all earnings are routed through domestic banking channels.

While mining income in the zone is exempt from taxes until 2035, operators must pay a monthly fee based on revenue and higher electricity tariffs when using the national grid.

The rules also include strict controls to prevent illegal activity, requiring companies and owners to pass background checks and follow financial transparency laws.

How Uzbekistan got here

Uzbekistan’s relationship with crypto has been a slow burn.

A 2018 presidential decree first acknowledged digital assets and established a basic regulatory framework, but it came with heavy guardrails. Mining was initially limited to legal entities using solar photovoltaic energy, and the regulatory posture was one of extreme caution.

The country spent several years watching from the sidelines while Kazakhstan next door became a global hashrate magnet, only to see Kazakh authorities forced into crackdowns on unregistered “gray” miners and a battle with grid stability.

Uzbekistan studied that playbook and opted for a deterrent strategy, requiring grid-connected miners to pay double the standard commercial electricity rate.

The stance has shifted with the introduction of a 15% electricity discount for registered miners and data centers, alongside the launch of Besqala Mining Valley.