TLDR
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Uzbekistan opens Crypto Mining Zone with strict revenue controls
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New mining hub allows foreign sales but locks funds locally
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Besqala Mining Valley offers tax breaks with tight oversight
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Uzbekistan expands mining rules with flexible power options
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Crypto Mining Zone targets growth while controlling cash flows
Uzbekistan has launched a Crypto Mining Zone in Karakalpakstan to regulate mining activity and control revenue flows. The new framework allows foreign crypto sales while requiring proceeds to return through domestic banks. The policy aims to expand investment while tightening financial oversight across the sector.
Crypto Mining Zone Sets Clear Operating Framework
Uzbekistan introduced the Crypto Mining Zone under a presidential decree signed on April 17. The framework took effect on April 20 and established the Besqala Mining Valley across Karakalpakstan. Authorities placed the zone under a new directorate linked to the regional Council of Ministers.
Registered legal entities can apply for residency and operate within the Crypto Mining Zone under defined rules. They can mine digital assets and sell them on local exchanges or foreign platforms. The framework allows direct contracts and crypto-to-crypto swaps to improve market flexibility.
The government requires all proceeds from mining sales to flow through domestic bank accounts. This rule ensures that funds generated in the Crypto Mining Zone remain within the national financial system. Authorities maintain visibility over cross-border crypto transactions while supporting controlled market activity.
Tax Incentives and Investment Strategy Drive Expansion
The decree grants tax exemptions for companies operating in the Crypto Mining Zone until January 1, 2035. In return, firms must pay a monthly fee equal to one percent of mining income. Officials must submit amendments to align the tax code with the new structure.
The Crypto Mining Zone forms part of a broader strategy to attract investment into Karakalpakstan. Development reports have identified the region as having high poverty and limited industrial activity. Therefore, the government uses targeted incentives to stimulate economic growth and infrastructure development.
Earlier initiatives included a tax-free zone for artificial intelligence and data center projects in the same region. That program offered tax exemptions and discounted electricity for large-scale investors. Consequently, Uzbekistan expects to attract over one billion dollars in foreign investment by 2030.
Energy Policy Shift Expands Mining Flexibility
The new Crypto Mining Zone framework revises earlier restrictions on energy use for mining operations. In 2023, authorities required licensed miners to rely only on solar power. The updated policy now allows a broader mix of energy sources.
Companies in the Crypto Mining Zone can use renewable energy, hydrogen, and grid electricity for operations. At the same time, authorities impose higher tariffs on grid electricity to manage consumption. The policy encourages energy diversification while maintaining cost controls.
This shift supports scalability within the Crypto Mining Zone while aligning with national energy priorities. It also improves operational flexibility for mining firms entering the regulated environment. Uzbekistan positions the zone as a controlled yet competitive hub for crypto mining activity.
