Uzbekistan has taken one of its sharpest turns yet toward the crypto industry, formally designating a dedicated cryptocurrency mining zone where qualifying companies will pay no income tax on mining earnings for a decade.
The initiative, signed into existence by President Shavkat Mirziyoyev on April 17 and effective April 20, puts a region better known for poverty than profit at the center of the country’s digital asset ambitions.
The zone carries the name Besqala Mining Valley and covers the entire territory of Karakalpakstan, an autonomous republic sitting in the northwestern corner of Uzbekistan, bordering the Aral Sea.
A 2025 United Nations Development Programme report described the region as having high poverty rates and limited industrial development, making it a priority for targeted investment incentives. The mining zone follows the same logic as a rug being laid in a bare room which is to build the infrastructure that draws capital in, and let economic activity follow.
Under the framework, the income tax exemption runs until January 1, 2035, a clean 10-year window from when the decree came into force. This isn’t a small concession. Crypto mining is an energy and capital-intensive business, and long-term tax certainty is one of the more persuasive tools a government can offer to companies weighing where to plant hardware.
What the zone actually allows, and requires
The rules are specific about who qualifies. Only legal entities that are formally registered and operating within Karakalpakstan can apply for resident status under the framework. Mining permits flow through the National Agency for Perspective Projects, a government body that has handled licensing in Uzbekistan’s digital asset sector before. Day-to-day administration of the zone sits with a newly created directorate under Karakalpakstan’s Council of Ministers.
Residents in good standing get meaningful operational flexibility. They can mine digital assets using a range of energy sources, renewables, hydrogen and even the national electricity grid, though grid usage comes with a higher tariff attached. That last point matters more than it might seem.
As recently as 2023, Uzbekistan’s National Agency for Perspective Projects required all licensed mining operations to run exclusively on solar power. Broadening that to include grid electricity and hydrogen removes a constraint that had effectively locked out operations that couldn’t build or source their own solar capacity.
On the sales side, zone residents are allowed to move their mined tokens on domestic exchanges, on foreign platforms, or through direct bilateral contracts. They can also swap mined assets for other cryptocurrencies.
The government has drawn one firm line, though: wherever the sale happens, the proceeds have to come back to a Uzbekistan bank account. Foreign exchange earnings stay in the domestic financial system, full stop.
In terms of cost operation, residents pay 1% of monthly mining income to the directorate running the zone, with those funds flowing into Karakalpakstan’s republican budget. Basically a modest overhead by any measure, particularly against the backdrop of a full income tax exemption.
Companies also face compliance obligations around anti-money laundering, standard regulatory requirements that have become table stakes for any government-sanctioned crypto operation anywhere in the world.
Fitting a broader pattern
The Besqala Mining Valley doesn’t exist in isolation. In late 2025, Uzbekistan launched a separate tax-free zone in the same region aimed at artificial intelligence projects and data centers.
That program offered full tax and duty exemptions through 2040 for foreign investors committing at least $100 million, with the government targeting more than $1 billion in foreign direct investment flowing into Karakalpakstan before 2030.
The crypto mining zone follows the same structural playbook, use concentrated, long-duration tax relief to position an underdeveloped region as a destination for capital-intensive digital infrastructure.
The logic is consistent in the sense that Karakalpakstan has land, it has renewable energy potential, and it has very little else drawing outside investment in. Special economic zones are the government’s answer to that gap.
What makes the mining decree notable beyond its tax terms is what it signals about Uzbekistan’s policy direction. The country spent years treating crypto mining as something to be carefully contained, approving it only under narrow solar-energy conditions and through licensed intermediaries.
This decree meaningfully expands the activity it permits. Grid access, foreign exchange sales and a broad energy mix are all concessions that make the zone commercially viable in a way that the previous solar-only framework never quite was.