Uzbekistan opens Besqala crypto mining zone in Karakalpakstan

A presidential resolution signed April 17 and effective April 20 established the Besqala Mining Valley, a special crypto mining zone covering the Republic of Karakalpakstan. Registered legal entities in the zone may carry out digital-asset mining and sell the assets on domestic or foreign platforms if proceeds are transferred to bank accounts in Uzbekistan.

The decree creates a directorate under Karakalpakstan’s Council of Ministers to register companies, grant resident status and oversee operations in the Besqala zone. Resident miners may sell coins on national exchanges, on overseas platforms through direct contracts, and swap mined tokens for other liquid cryptocurrencies. All revenues from those sales must be deposited into Uzbek banks, and the framework includes controls on how proceeds move through the domestic financial system.

Participating entities receive a tax exemption that runs through Jan. 1, 2035. At the same time, residents are required to pay a monthly fee equal to 1% of income from mining activity to the zone’s directorate. The government has ordered officials to prepare draft amendments to the national tax code within two months to align tax rules with the new regime.

The decree changes earlier energy rules for mining. A 2023 regulation restricted licensed mining to solar power. The Besqala framework permits a wider mix of energy sources inside the zone, including renewable generation, hydrogen and grid electricity. The resolution sets higher tariffs for electricity drawn from the grid to differentiate costs by energy source.

The government has used special-zone incentives in Karakalpakstan to attract investment to the republic, which a 2025 United Nations Development Programme report described as having high poverty rates and limited industrial development. Separate incentives for artificial intelligence and data-center projects in the region include discounted electricity and long-term tax exemptions; officials project substantial foreign capital inflows to those initiatives by 2030.

The resolution takes effect immediately. The new directorate will handle resident applications, fee collection and compliance oversight. The bank-deposit requirement and monthly fee are intended to create traceability for crypto revenues and provide a revenue stream for local authorities while the tax exemption aims to attract mining operators to the zone.