Uzbekistan crypto mining: How will the Beshkala Mining Valley operate?

Uzbekistan has established a special crypto mining zone across Karakalpakstan, introducing tax incentives, expanded power options, and a dedicated regulatory framework to attract licensed mining companies.

Summary

• Uzbekistan has launched the Beshkala Mining Valley as a regulated crypto mining zone across Karakalpakstan
• Licensed miners can use grid power, renewable energy, and hydrogen while receiving tax exemptions through 2035
• Mining companies must keep crypto sale proceeds in Uzbek banks and operate under state licensing rules
• The project allows miners to reuse excess heat for greenhouse farming as part of the regional development plan.

Under a presidential resolution that took effect on April 20, Uzbekistan has designated the entire Republic of Karakalpakstan as the Beshkala Mining Valley, creating a regulated environment for cryptocurrency mining while linking the initiative to the region's economic development plans.

The resolution allows licensed mining companies operating within the zone to use electricity from the national grid, renewable energy sources such as solar power, and hydrogen-based power generation. It also creates a legal pathway for miners to sell their digital assets through Uzbekistan's licensed crypto exchanges, foreign trading platforms, direct agreements, or by converting them into other liquid crypto assets.

Companies participating in the program must transfer revenue from crypto asset sales to bank accounts held in Uzbekistan, a requirement intended to keep transactions within the country's regulated financial system while maintaining oversight of mining-related income.

Only legal entities registered in Karakalpakstan will qualify for resident status within the Beshkala Mining Valley. Businesses seeking to operate there must first obtain resident status through the zone's directorate before applying for a crypto mining license issued under the supervision of the National Agency for Perspective Projects, the authority responsible for regulating the sector.

A dedicated directorate will oversee the management of the mining valley and process applications from prospective operators. Besides regulating mining activity, the administration will supervise implementation of the project's development policies across the region.

Mining companies will also be permitted to reuse excess heat generated by their equipment for greenhouse farming on agricultural land, creating an additional use for energy produced during mining operations.

The resolution exempts income earned from mining activities from taxes and mandatory payments until Jan. 1, 2035, providing one of the main financial incentives for companies considering investment in the zone.

The latest framework also changes part of Uzbekistan's previous mining policy.

Earlier licensing rules introduced in October 2023 required miners to obtain official authorization before operating and largely limited mining activities to electricity generated from solar power, except where legislation provided otherwise.

Under the new framework for the Beshkala Mining Valley, approved residents can instead draw power from the unified electricity grid alongside renewable energy and hydrogen-based generation. The updated approach gives operators more flexibility while preserving the country's licensing requirements for crypto mining businesses.

Uzbek law continues to define crypto mining as the computational process used to maintain distributed ledgers by validating blocks and preserving network integrity. The activity remains restricted to legal entities rather than individual miners.

Alongside operational rules, the government has tightened financial requirements governing proceeds from crypto mining.

Residents of the mining valley may sell mined digital assets through domestic exchanges, overseas trading platforms, direct contracts, or by exchanging them for other liquid crypto assets. Regardless of where the assets are sold, proceeds must ultimately be transferred to bank accounts located in Uzbekistan.

The framework is intended to keep mining-related revenue within the domestic banking system while allowing companies to access international cryptocurrency markets.

According to an earlier presidential decree signed on April 17 and effective from April 20, residents of the mining zone are also required to pay a monthly fee equal to 1% of mining income to the zone's directorate, even as they benefit from tax exemptions running through the beginning of 2035.

Creation of the Beshkala Mining Valley forms part of Uzbekistan's ongoing efforts to attract investment into Karakalpakstan, a region that has remained a priority for economic development initiatives.

Government plans have linked the mining zone with improvements in regional living standards while encouraging more efficient use of renewable energy resources through regulated crypto mining projects.

The mining initiative follows another technology-focused program launched for Karakalpakstan in 2025, when Uzbekistan approved a separate tax-free zone for artificial intelligence and data center projects. That program offered discounted electricity prices and tax incentives to foreign investors, with reports stating that investments of at least $100 million could qualify for exemptions from taxes and customs duties until 2040.

Officials said the AI and data center project was designed to attract more than $1 billion in foreign investment by 2030, placing the new crypto mining zone within a series of long-term development initiatives targeting the region.

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