Uzbekistan Launches First Tax-Free Crypto Mining Zone in Karakalpakstan
Uzbekistan has established its first tax-free cryptocurrency mining zone, the Besqala Mining Valley, covering the entire territory of the Republic of Karakalpakstan. Approved by the Ministry of Justice on July 8, the zone exempts income from crypto mining until 2035, but only locally registered legal entities can participate. The regulation, developed by the National Agency for Prospective Projects (NAPP), follows an April presidential resolution. Uzbekistan maintains a controlled approach to crypto: mining is corporate-only, requires permits, and must use renewable energy. Violations now carry criminal liability under 2023 amendments to the Criminal Code. The zone aims to improve oversight of energy consumption, as 91 mining farms were caught stealing electricity in 2024. Miners in Besqala can use various renewables and pay double for grid electricity. However, environmental concerns—e-waste, water use, noise—remain unaddressed, and the vast territory (40% of Uzbekistan) may complicate monitoring. The zone could boost the isolated, environmentally stressed Karakalpakstan region.
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