Uzbekistan has taken significant strides to foster the growth of the cryptocurrency sector. The Besqala Mining Valley, established by a presidential decree, encompasses the entire Karakalpakstan region, which accounts for approximately 40% of Uzbekistan's land area. This initiative, signed into law on April 17, 2026, by President Shavkat Mirziyoyev, allows for a tax-free environment for crypto miners.
#What incentives are provided for miners?
Miners in the Besqala Mining Valley can enjoy substantial financial benefits until January 1, 2035. They will not be subject to taxes on corporate income, property, land, or VAT. Instead, they are required to pay a minimal 1% administrative fee based on their monthly revenue. This attractive tax set-up aims to encourage both local and international investment in the mining sector.
#How will operations be regulated?
A dedicated directorate, operating within Karakalpakstan’s Council of Ministers, will handle the daily regulation of mining operations. The National Agency for Perspective Projects (NAPP) is tasked with overseeing the permitting processes. Notably, only local entities can benefit from this initiative, preventing foreign mining firms from entering without establishing a local presence. This requirement emphasizes the importance of community integration in the mining sector.
On July 8-9, 2026, the Ministry of Justice approved operational regulations that specify acceptable energy sources for mining activities. Miners can utilize the national grid, renewable energy options, and even hydrogen. Furthermore, all mining operations must connect to the Automated Commercial Accounting System for Electric Energy (ASKUE), which allows the government to monitor energy consumption and production in real time. Importantly, miners are also obligated to channel their cryptocurrency proceeds through local banks, ensuring that all financial activities contribute to Uzbekistan's financial ecosystem.
#What prospects lie ahead for Uzbekistan’s crypto industry?
Karakalpakstan remains an autonomous yet economically less developed area in Uzbekistan. While the Besqala Mining Valley is poised for development, no mining companies have yet been reported to have commenced operations there. This leaves the upcoming period crucial for assessing the success and appeal of Uzbekistan's new mining initiative and its potential to stimulate economic growth in the region.