Uzbekistan Unveils Crypto Mining Zone With Tax Holiday Until 2035

TLDR

• Uzbekistan will exempt mining income tax in Besqala Mining Valley until 2035.
• Miners in the zone must pay 1% of monthly income to the local directorate.
• Only legal entities registered in Karakalpakstan can access the tax holiday.
• Mined crypto can be sold abroad, but proceeds must go to Uzbek banks.

Uzbekistan has launched a special crypto mining zone in Karakalpakstan with a tax holiday through 2035. The move sets out a clear plan to attract miners, jobs, and energy investment. It also gives the country a wider legal path for mining activity.

The zone is called Besqala Mining Valley. It was created under a decree signed by President Shavkat Mirziyoyev. The project focuses on registered mining firms and renewable energy use.

Uzbekistan sets up Besqala Mining Valley

Uzbekistan will establish Besqala Mining Valley across Karakalpakstan, an autonomous republic in the northwest of the country. The decree gives mining firms an income tax exemption until 2035. This benefit applies only to legal entities registered and operating in Karakalpakstan.

The government said the zone aims to attract investment and create jobs. It also wants to support wider use of renewable energy in mining. This gives the project both an industrial and energy focus.

Mining permits in the zone will be issued by the National Agency for Perspective Projects. A separate directorate will manage the zone and oversee its operation. This structure gives the project a formal local system.

The decree marks a change in policy. Earlier rules had limited crypto mining to firms using solar photovoltaic energy. The new framework allows more flexibility in how renewable power can be used.

Renewable energy rules and sales framework

The decree allows mining operations in the zone to use electricity from all renewable sources. This expands the earlier approach and opens the door to a broader energy base. It may help firms build projects around available local power.

Residents of the zone may sell mined cryptocurrencies on local or foreign exchanges. They may also exchange those assets for cash or other tokens. This gives miners room to manage sales based on market conditions.

Still, the government has added a clear financial control rule. The decree says “”proceeds from such sales must be transferred to banks in Uzbekistan.” That means the money generated by mining must return to the domestic banking system.

The rule may help the government monitor fund flows linked to mining activity. It also keeps a larger share of the sector’s financial activity within the country. That approach sits alongside the tax break and market access.

Fees, compliance, and local eligibility

Residents of Besqala Mining Valley will not pay income tax on mining activity until 2035. However, they must pay 1% of monthly mining income to the directorate. That payment will go to the Karakalpakstan republican budget.

The tax break is limited to eligible local entities. Only companies registered and operating in Karakalpakstan can qualify as residents of the zone. This rule ties the benefit to local business activity.

The decree also requires compliance with anti-money laundering rules and other controls. These measures are meant to prevent financial crime in the sector. The framework shows that Uzbekistan is opening the door to mining, but with strict operating rules.

The new zone places crypto mining inside a formal legal and financial structure. It combines tax relief, renewable energy use, and local oversight. That makes Besqala Mining Valley a defined state-backed mining project.

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