Uzbekistan has created a supervised crypto mining zone in Karakalpakstan under a presidential resolution signed on April 17, establishing the “Besqala Mining Valley” across the Republic of Karakalpakstan. The decree, effective April 20, allows registered legal entities to apply for resident status through a new directorate under the republic’s Council of Ministers and carry out mining under state oversight.
The new framework gives approved companies the right to mine crypto assets inside the zone and sell those assets on local exchanges or foreign platforms, including through direct contracts and swaps into other liquid crypto assets. However, the decree maintains tight control over revenue flows: companies must transfer proceeds from crypto sales to bank accounts in Uzbekistan, keeping funds inside the local financial system even when sales occur outside the country.
To attract investors, the decree offers tax exemptions for mining zone residents until January 1, 2035. In return, companies must pay a monthly fee equal to 1% of mining income to the zone’s directorate. Officials must also submit proposed tax code changes within two months to align the rules with the new system. Karakalpakstan has remained a focus for investment efforts after development reports described the region as facing high poverty levels and limited industrial growth.
The latest decision also modifies Uzbekistan’s earlier crypto mining policy. In 2023, the National Agency for Perspective Projects (NAPP) required licensed miners to use only solar power for crypto mining operations. Under the new decree, zone residents can use a broader mix of power sources, including renewable power, hydrogen, and grid electricity, though miners using grid power will face higher tariffs.
The mining zone fits a wider economic strategy in Karakalpakstan. In 2025, the government moved to create a separate tax-free zone for artificial intelligence and data center projects in the same region, offering discounted electricity and tax exemptions to foreign investors. Firms investing at least $100 million could receive full tax and duty exemptions until 2040, with the country targeting more than $1 billion in foreign investment from that project by 2030.
