The government of Uzbekistan is creating a “crypto mining valley” in one of its regions bordering Central Asia’s mining powerhouse, Kazakhstan.
Miners will be granted almost a decade-long tax exemption as part of the nation’s push to catch up with neighbors that are already ahead in developing the industry.
Bitcoin miners to enjoy benefits in Uzbekistan’s new crypto valley
Uzbekistani authorities are establishing a special economic zone called the Besqala Mining Valley in the autonomous Republic of Karakalpakstan.
The region is situated in the northwestern part of the country and borders Kazakhstan, which accounted for roughly 13% of the global Bitcoin hashrate not too long ago.
The zone has been established with a new decree signed by President Shavkat Mirziyoyev, the government’s portal for legal information announced Tuesday.
The income of cryptocurrency miners operating there will be exempt from taxation, according to the Telegram post quoted by the leading Russian-language crypto news outlet Bits.media.
The tax preference will be in place until January 1, 2035, according to the document, alongside other benefits for the mining enterprises based in the area.
Residents of the valley have been promised unimpeded access to Uzbekistan’s unified power grid, which increasingly relies on renewable energy resources.
The rest of the needed electricity for the mining equipment will be supplied by hydrogen power plants built in Karakalpakstan itself.
Miners will be authorized to sell the extracted digital assets on both domestic and international crypto trading platforms, the report further detailed.
The companies engaged in the Bitcoin-related business activity will be licensed by the National Agency for Prospective Projects (NAPP).
To obtain resident status, they are required to file an application with the directorate responsible for the Besqala Mining Valley.
Will Uzbekistan become Central Asia’s next Bitcoin mining hotspot?
The establishment of the special economic zone in Karakalpakstan is linked to Uzbekistan’s renewed efforts to create favorable conditions for the crypto mining sector.
In February of this year, the nation issued its first mining permit, thus joining a club of former Soviet Republics in Central Asia where the industry has been gaining a foothold.
The authorization was granted to a local company called NexaGrid, which intends to use it to set up its mining facilities in the southwest Bukhara region.
At the time, one of its founders noted that the licensing puts an end to months of uncertainty, as reported by Cryptopolitan.
The regulatory move came more than two years after the NAPP adopted regulations for the issuing of mining permits.
As admitted by one of the agency’s top executives, there were no legal crypto farms registered in the country during that period.
Uzbekistan has a lot more to do to come close to the crypto mining leaders of Central Asia, but opportunities to catch up may arise.
For example, Kazakhstan, which was once among the world’s top three mining destinations, lost its spot in the chart when its government introduced higher electricity rates for crypto farms.
It did that to deal with growing energy deficits caused by the influx of mining firms, sparked by China’s decision to enforce a ban on the activity a few years ago.
As a result, Kazakhstan lost some of its appeal for miners. However, Astana lifted some mining restrictions last fall as part of a new strategy to become a Eurasian crypto hub.
Citing power shortages, Kyrgyzstan halted all mining on its territory this past winter, although its government later indicated coin minting would resume in the spring as it’s profitable.
Competition in the region is likely to accelerate. Uzbekistan’s southern neighbor, Turkmenistan, legalized crypto mining and trading with a law that entered into force in January.
Tashkent has been gradually opening the country for digital money. While crypto payments are still prohibited, Uzbekistan announced it’s allowing the use of stablecoins for settlements this year.