Uzbekistan launches government-supported cryptocurrency mining hub with fiscal incentives
The Central Asian nation has established a regulated cryptocurrency mining facility in its Karakalpakstan region, permitting international cryptocurrency sales with mandatory local banking requirements.
The Central Asian nation of Uzbekistan has established a designated cryptocurrency mining facility throughout the Karakalpakstan region following a presidential resolution that received official signature on April 17, introducing a monitored regulatory structure that permits authorized mining operations to conduct sales of mined cryptocurrency on international exchanges while maintaining financial proceeds within the nation's domestic banking infrastructure.
Through a presidential decree that became operational on April 20, the government created the "Besqala Mining Valley," a designated mining territory spanning the Republic of Karakalpakstan, where legally registered entities are authorized to engage in cryptocurrency mining operations, utilize diverse energy sources and submit applications for residency status via a newly established directorate operating under the republic's Council of Ministers.
The regulatory structure grants miners operating within the designated zone authorization to conduct sales of cryptocurrency assets acquired through mining activities on domestic cryptocurrency exchanges or international trading platforms, including through bilateral contractual agreements, and to convert them into alternative liquid cryptocurrency assets. However, the establishment arrives with stringent regulatory controls governing the movement of mining revenues through the financial infrastructure, and financial proceeds generated from such sales are mandated to be deposited into banking accounts located within Uzbekistan.
Tax breaks aim to lure miners
The presidential decree additionally establishes a taxation exemption extending through Jan. 1, 2035, while simultaneously mandating participating entities to remit a monthly payment equivalent to 1% of revenue generated from mining operations to the zone's administrative directorate. The resolution independently directs government officials to prepare and submit proposed amendments to Uzbekistan's taxation code within a two-month timeframe.
The recent decree supplements Uzbekistan's ongoing utilization of special economic zone incentive programs in Karakalpakstan designed to stimulate investment activity into a geographic area that a 2025 United Nations Development Programme report characterized as experiencing elevated poverty levels and constrained industrial advancement.
The recently introduced framework additionally modifies Uzbekistan's previous methodology toward cryptocurrency mining operations. In 2023, Uzbekistan's National Agency for Perspective Projects (NAPP) published a decree addressing the licensing of cryptocurrency mining activities, mandating that companies exclusively utilize solar power for digital asset mining operations.
The current decree permits a broader variety of energy sources within the designated zone, encompassing renewable energy, hydrogen power and conventional grid electricity, with elevated tariff structures imposed for grid power consumption.
Uzbekistan expands special-zone strategy to draw investment
The initiative additionally aligns with a more comprehensive investment approach in Karakalpakstan. Based on a Reuters report published in November 2025, the government had created a distinct tax-exempt zone dedicated to artificial intelligence and data center initiatives, providing subsidized electricity rates and tax relief measures to attract international investors.
Through the program, international companies committing investments of $100 million or greater receive complete tax and customs duty exemptions extending until 2040. Based on the report, Uzbekistan anticipates attracting in excess of $1 billion in foreign investment capital by 2030 through the AI special zone initiative.