Uzbekistan Launches State-backed Crypto Mining Zone
Under a decree that takes effect Monday, the “Besqala Mining Valley” will operate across the Republic of Karakalpakstan. Within this zone, registered legal entities can engage in crypto mining, utilize a combination of energy sources, and apply for residency status through a newly formed directorate under the republic’s Council of Ministers.
The framework permits miners to sell crypto assets generated from mining on both domestic crypto exchanges and foreign platforms, including through direct agreements, and to convert them into other liquid digital assets. However, strict oversight remains in place, requiring that all proceeds from such sales be transferred into bank accounts within Uzbekistan.
Incentives and regulatory adjustments
The decree includes significant tax incentives, offering exemptions until Jan. 1, 2035. At the same time, mining companies must pay a monthly fee equal to 1% of their mining income to the zone’s directorate. Authorities have also been instructed to prepare proposed amendments to the national tax code within two months.
This initiative builds on Uzbekistan’s broader use of special economic zones in Karakalpakstan to attract investment into the region, which a 2025 United Nations Development Programme report identified as having high poverty levels and limited industrial growth.
Additionally, the new framework marks a shift from earlier policies. In 2023, the National Agency for Perspective Projects mandated that crypto mining operations rely exclusively on solar power. The updated decree now allows a broader energy mix, including renewable sources, hydrogen, and grid electricity, with higher tariffs applied to grid usage.
Broader investment strategy in Karakalpakstan
The crypto mining zone is part of a wider effort to attract foreign investment to the region. A Reuters report from November 2025 noted that the government had already established a separate tax-free zone focused on artificial intelligence and data center projects, offering reduced electricity costs and tax incentives.
Under that program, foreign investors committing $100 million or more are eligible for full tax and duty exemptions until 2040. Uzbekistan aims to bring in more than $1 billion in foreign investment by 2030 through its AI-focused special economic zone initiatives.
Sources:
https://cointelegraph.com/news/uzbekistan-crypto-mining-zone-karakalpakstan-investment-push
https://www.undp.org/sites/g/files/zskgke326/files/2025-10/report_informal_economy_eng.pdf