Uzbekistan has introduced a government-supported framework for large-scale cryptocurrency mining with the creation of the Besqala Mining Valley, a designated special zone in the autonomous republic of Karakalpakstan. The initiative was formalized through a presidential decree signed by President Shavkat Mirziyoyev.
The project positions crypto mining as an industrial activity tied to energy policy, investment inflows, and job creation rather than a purely speculative sector. Under the framework, only registered legal entities will be permitted to operate mining businesses inside the zone, with oversight handled by state institutions.
Besqala Mining Valley established under new decree
The Besqala Mining Valley spans across Karakalpakstan in northwestern Uzbekistan. A dedicated administrative structure under the Cabinet of Ministers will review applications and approve mining operations. The National Agency for Perspective Projects will issue permits for participation in the zone.
The decree confirms that mining companies operating inside the zone will receive a 10-year tax exemption, with income from mining activities exempt until January 1, 2035. Operators must contribute a monthly fee equal to 1% of mining revenue to the agency managing the zone, with funds directed to the Karakalpakstan republican budget.
One requirement stands out across the regulatory structure. All proceeds from crypto-related sales must be transferred to domestic bank accounts in Uzbekistan, regardless of whether assets are sold on local exchanges or international platforms.
Energy policy placed at the center of mining rules
The government framework links mining activity directly to energy resources. Operators in Besqala Mining Valley may use electricity from renewable sources, including solar and hydrogen systems, alongside access to the national power grid.
Earlier versions of Uzbekistan’s crypto mining policy limited operations primarily to solar photovoltaic energy. The new structure expands that definition, allowing broader participation in controlled energy systems.
Electricity drawn from the public grid will come at higher tariffs, a design that encourages reliance on renewable generation within the zone. A previous regulatory approach required grid-connected miners to pay elevated electricity rates, a policy aimed at controlling demand pressure on the national system.
Uzbekistan’s updated model shifts toward structured industrial participation rather than restriction alone. The inclusion of multiple energy sources signals a more flexible approach to mining development.
Regulated trading and financial oversight requirements
Mining firms operating in the zone will be allowed to sell mined cryptocurrencies through direct contracts on exchanges within Uzbekistan and on overseas platforms. They may also convert assets into other cryptocurrencies.
Despite this flexibility, the system retains strict financial controls. All earnings must flow through domestic banking channels, ensuring that capital movement remains traceable within the national financial system.
The decree also introduces compliance requirements for operators. Companies and owners must pass background checks and adhere to financial transparency rules designed to prevent illicit activity. Anti-money laundering obligations form part of the licensing framework.
These measures place mining activity under direct regulatory supervision from multiple state bodies, combining industrial policy with financial oversight.
Shift from earlier restrictive policy
Uzbekistan’s current approach reflects a gradual shift from earlier caution toward structured legalization. In 2018, the country introduced its first formal framework for digital assets, which allowed mining only under strict conditions and primarily through solar energy use.
The early regulatory stance placed significant limits on participation and positioned mining as a tightly controlled activity. Over time, the government studied regional developments, including Kazakhstan’s experience with large-scale mining growth and subsequent energy strain linked to unregulated operations.
That background shaped Uzbekistan’s approach to grid pricing and licensing. Grid-connected miners were previously subject to higher electricity rates to discourage uncontrolled expansion.
Recent policy adjustments include incentives such as electricity discounts for registered miners and data centers. The launch of Besqala Mining Valley builds on those changes, offering a structured environment with defined tax and operational rules.
Industrial strategy tied to investment and energy use
The government describes the initiative as a way to attract foreign investment, expand renewable energy usage, and support employment in Karakalpakstan. A parallel initiative last year established a tax-free zone focused on artificial intelligence and data center infrastructure in the same region, reflecting a broader technology development strategy.
Mining policy in Uzbekistan now appears closely linked to energy utilization goals. The structure of Besqala Mining Valley reflects a model where electricity capacity, particularly from renewable sources, becomes an economic input for digital asset production.
Meanwhile, financial flows remain anchored within the domestic banking system, ensuring state visibility over mining-related revenue.
Regulatory framework defines controlled expansion
The creation of Besqala Mining Valley establishes one of the most structured national frameworks for crypto mining in Central Asia. It combines tax incentives, energy policy alignment, and financial oversight under a single administrative zone.
While mining companies gain long-term tax relief and access to diversified energy sources, they must operate within strict compliance rules and maintain domestic financial reporting.
The model reflects a controlled expansion strategy rather than unrestricted market liberalization. It sets defined boundaries for participation while opening a regulated channel for investment and industrial-scale mining activity.
Tanya Petrusenko
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