Uzbekistan Unveils First Tax-Free Crypto Mining Zone in Besqala Valley

Uzbekistan has launched its first tax-free crypto mining zone in the Besqala Mining Valley, covering almost 40% of the country's total territory. The new regulation, approved by the Ministry of Justice on July 8, allows locally registered legal entities to mine cryptocurrency without paying taxes until 2035.

The initiative is part of Uzbekistan's efforts to control and regulate crypto mining activities within a set territory. The country has been gradually liberalizing its approach towards cryptocurrencies since 2018, when it recognized and regulated various crypto activities, including mining. In 2022, the National Agency for Prospective Projects (NAPP) was established as the principal regulator responsible for licensing, registering, and investigating foreign entities.

The Besqala Mining Valley offers more liberalized electricity use compared to other parts of Uzbekistan, allowing miners to use various forms of renewable energy, including hydrogen-generated electricity. However, concerns have been raised about environmental monitoring and potential issues such as electronic waste, water consumption, cooling, noise, heat discharge, equipment disposal, or environmental-impact assessments.