Uzbekistan Creates Crypto Mining Zone, Offers Tax Breaks Through 2034

Uzbekistan is setting up a government-backed special zone for cryptocurrency mining.

Cointelegraph reported on April 22 that Uzbekistan enacted a presidential decree on April 20 to establish the Besqala Mining Valley, a special zone for cryptocurrency mining. Registered legal entities will be allowed to operate mining businesses there. A newly created body under the Cabinet of Ministers will review applicants and approve mining operations.

Only mining companies operating within the zone will be allowed to sell cryptocurrency. Companies in the zone may sell mined cryptocurrency through direct contracts on exchanges in Uzbekistan and on overseas exchanges. They may also exchange it for other cryptocurrencies. Proceeds from those sales, however, must be remitted to bank accounts in Uzbekistan.

The government will also provide tax incentives. Companies in the zone will be exempt from taxes through the end of 2034. They must still pay a monthly fee equal to 1% of mining revenue to the agency operating the zone. The government also plans to prepare a separate amendment to the tax code within the next two months to support the tax incentives.

Permitted power sources for mining have also been expanded beyond solar generation to include hydrogen and the general power grid. Electricity drawn from the public grid, however, will be charged at a higher rate.

Uzbekistan appears set to step up efforts to attract foreign investment into the mining zone. Late last year, the government created a tax-free zone in the same area dedicated to artificial intelligence and data center facilities as part of a push to draw more overseas capital.