The president of Uzbekistan signed a resolution on Friday designating a portion of Karakalpakstan as a special crypto mining zone. The zone will be subject to oversight, and approved mining companies will be able to sell their digital assets on international platforms while keeping the proceeds they earn in Uzbekistan.
A new directorate under the republic’s Council of Ministers will process applications for resident status, and registered legal entities can conduct crypto mining in the “Besqala Mining Valley,” a special mining zone across the Republic of Karakalpakstan, which was established by a presidential decree that took effect on Monday. The valley will use a mix of power sources.
As a result of the framework, miners in the area may trade in their mined cryptocurrency for other liquid cryptocurrencies on domestic or international exchanges, as well as via direct contracts. But there are tight regulations on the flow of mining profits via the financial system, and all sales must go to Uzbekistani accounts.
Tax Exemption
In addition to a tax exemption until January 1, 2035, the decree mandates a monthly charge equivalent to 1% of mining profits to be paid to the directorate of the zone. Separately, the resolution mandates that within two months, Uzbek authorities provide proposed changes to the country’s tax legislation.
A UNDP assessment from 2025 characterized Karakalpakstan as a place with high poverty rates and minimal industrial growth; this new directive expands on Uzbekistan’s previous use of special-zone incentives in that region to entice investment.
As part of the new framework, Uzbekistan is revising its previous strategy for cryptocurrency mining. Firms in Uzbekistan were mandated to exclusively use solar power for cryptocurrency mining in 2023 by the National Agency for Perspective Projects (NAPP), which was responsible for issuing licenses to the industry.
Greater prices are imposed for grid consumption, but the new regulation permits a broader variety of power sources inside the zone, including renewable, hydrogen, and grid energy.