Uzbekistan launches special crypto mining zone with 10-year tax holiday

Uzbekistan is launching a special crypto mining zone in Karakalpakstan, where mining income tax will be exempt until 2035.

According to a decree from President Shavkat Mirziyoyev, the area, named "Besqala Mining Valley," would be established across the territory of Karakalpakstan, which is an autonomous republic in northwestern Uzbekistan.

The main goal of the initiative is to attract investments, create new jobs, and promote the use of renewable energy resources in crypto mining.

The decree stipulates that mining operations in the Besqala Mining Valley may use electricity from all types of renewable energy sources. Residents may sell mined cryptocurrencies on local or foreign exchanges for cash or other tokens. However, the proceeds from such sales must be transferred to banks in Uzbekistan, the document noted. 

Under the framework, only legal entities registered and operating in Karakalpakstan are eligible for the tax exemption as residents of the zone. Mining permits will be issued by the National Agency for Perspective Projects, while a dedicated directorate will manage the special zone.

Residents will be required to pay just 1% of their monthly mining income to the directorate, which is directed to the Karakalpakstan republican budget. Residents of the zone will need to comply with strict anti-money laundering and other regulations to prevent financial crimes.

This decree relaxes Uzbekistan's previously strict regulations on crypto mining, which had limited the activity to entities using solar photovoltaic energy.