Uzbekistan has designated the entire territory of Karakalpakstan as the "Beshkar Mining Valley," establishing a separate licensed operating zone for cryptocurrency mining. The new arrangement places tax incentives, electricity supply, and financial oversight within the same framework, aiming to attract compliant mining companies to the region and stimulate regional investment.

Licensed mining companies can connect to the power grid

According to the now-effective presidential decree, mining companies entering the region can use the national grid for power, as well as access renewable energy sources such as solar power and hydrogen power generation. Compared to the old regulations implemented in October 2023, this arrangement significantly relaxes restrictions on power sources.

Previously, Uzbekistan's licensing system for cryptocurrency mining required mining companies to obtain official authorization and largely restricted electricity sources to solar power, unless otherwise stipulated by law. Under the new framework, approved companies retain the licensing requirements while gaining more flexible electricity options.

Tax incentives will be extended to 2035.

The new regulations stipulate that revenue generated from mining activities and related mandatory fees will be exempted until January 1, 2035. This is one of the core conditions for attracting investment to the project.

However, businesses in the park are not entirely without costs. According to another presidential decree that took effect on April 20, resident businesses in the park are still required to pay a monthly fee to the park management agency, amounting to 1% of their mining revenue.

• The tax exemption period ends on January 1, 2035.
• The monthly management fee is 1% of the mining revenue.
• Eligibility is limited to locally registered legal entities.

Proceeds from the sale must remain within the domestic banking system.

The new system allows mining companies to dispose of mined tokens through licensed cryptocurrency exchanges in Uzbekistan, overseas trading platforms, direct agreements, or by exchanging them for other highly liquid cryptocurrency assets.

Regardless of where the assets are ultimately sold, all proceeds must be transferred to bank accounts within Uzbekistan. The government hopes this will keep funds within the country's regulated financial system and strengthen the tracking of mining revenue.

Meanwhile, Uzbek law still restricts cryptocurrency mining to activities conducted by legal entities; individual miners are not permitted. Companies wishing to enter the area must first obtain residency status within the zone and then apply for a mining license regulated by the National Agency for Foresight Projects.

Promoted in conjunction with regional development plans

The Beshkala Mining Valley is not only a crypto project but is also included in Karakalpakstan's regional development plan. In addition to reviewing company applications, the park's management agency will be responsible for promoting the implementation of supporting local policies.

The new regulations also allow mining companies to use waste heat generated by their equipment for agricultural greenhouses, which is seen as part of improving energy efficiency. The Uzbek government had previously promoted AI and data center tax-free zones in the region; the introduction of a dedicated mining zone indicates that Karakalpakstan is a key area for technology investment.