Uzbekistan has formally established a dedicated crypto mining zone in its western Karakalpakstan region, opening a regulated corridor that lets approved companies sell mined digital assets on both domestic and foreign platforms. The framework, set out in a presidential resolution signed April 17 and effective April 20, creates the “Besqala Mining Valley” under the Republic of Karakalpakstan’s Council of Ministers.
The decree grants registered legal entities resident status within the zone through a newly formed directorate, and it carries a sweeping tax exemption that runs through January 1, 2035.
In exchange, zone participants must pay a monthly fee equal to 1% of their mining income to the directorate, and all proceeds from asset sales must be routed into Uzbekistan-based bank accounts.
What the Besqala Mining Valley Allows and Requires
Under the new framework, miners operating inside the zone can sell crypto assets on national exchanges or on foreign platforms, including through direct bilateral contracts, and may swap mined tokens for other liquid crypto assets.
That flexibility represents a significant expansion compared to Uzbekistan’s previous approach. Back in 2023, the National Agency for Perspective Projects required licensed mining firms to use only solar energy, a condition that limited scale and attracted criticism from operators needing more reliable baseload power.
The Besqala decree broadens the permitted energy mix to include renewable sources, hydrogen energy and conventional grid electricity.
Grid power carries higher tariffs than renewables under the scheme, creating a pricing incentive for greener operations without imposing an outright ban on fossil-fuel sourced electricity.
The government has also instructed relevant officials to submit proposed amendments to Uzbekistan’s tax code within two months, signaling that the legislative framework around the zone is still being finalized.
Revenue controls are central to the design. While miners gain international market access, the requirement that all proceeds flow back through Uzbek bank accounts gives regulators visibility into capital movements and prevents outright capital flight.
That combination of openness and oversight is becoming a familiar template among Central Asian states trying to attract foreign crypto capital without ceding monetary control.
A Broader Investment Push in Karakalpakstan
The mining zone is part of a wider government strategy to develop Karakalpakstan economically. A 2025 United Nations Development Programme report described the region as having high poverty rates and limited industrial development, giving policymakers a strong motivation to pursue any investment that generates local employment and infrastructure spending.
Uzbekistan had already applied the special-zone model to technology investment in Karakalpakstan before this decree.
A separate initiative reported in late 2025 created a tax-free zone for artificial intelligence and data center projects, offering discounted electricity and full tax and duty exemptions through 2040 to foreign firms committing at least $100 million.
The government projected that initiative alone would draw more than $1 billion in foreign investment by 2030, according to that reporting.
The crypto mining zone follows the same logic: attract capital-intensive infrastructure projects with upfront tax relief, enforce financial discipline through banking mandates and generate recurring fee revenue through the directorate levy.
For foreign mining operators, the 1% monthly income fee is modest compared to the value of a decade-long tax exemption in a jurisdiction with relatively low electricity costs.
Uzbekistan has been steadily building out its digital asset regulatory architecture. Earlier this year, the country greenlit stablecoins for payments under a sandbox regime, suggesting that the Besqala Mining Valley fits a coordinated policy agenda rather than an isolated experiment.
The combination of a defined mining zone, stablecoin payment rails and an AI investment corridor positions Karakalpakstan as a test bed for Uzbekistan’s broader ambitions in the digital economy, even as the details of the tax code amendments remain pending.
For crypto mining operators scouting emerging jurisdictions, the decree offers a rare blend of legal clarity, energy flexibility and international sales rights at a time when regulatory uncertainty continues to weigh on operations in more established markets.
The key variable will be how the directorate interprets and enforces the banking repatriation rules in practice, and whether the promised tax code amendments introduce any additional conditions before the zone becomes fully operational.
Not Financial Advice: This article is for informational purposes only. Crypto investments are highly volatile. Always do your own research.
