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 Republic of Karakalpakstan. Approved by the Ministry of Justice on July 8, the zone exempts crypto mining income from taxes until 2035, but only locally registered legal entities can participate. The initiative, developed by the National Agency for Prospective Projects (NAPP), follows a presidential resolution from April 17. Uzbekistan maintains a regulated approach to crypto: mining is restricted to legal entities, must use renewable energy (solar or hydrogen in Besqala), and requires a five-year permit from NAPP. Violations now carry criminal liability under 2023 amendments to the Criminal Code. While the zone aims to boost economic development in the isolated Karakalpakstan region and improve energy oversight, concerns persist about environmental impact, electricity theft, and potential strain on the national grid. In 2024 alone, 91 mining farms were caught stealing electricity.
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