Uzbekistan crypto mining valley: 2035 tax exemption for miners
Uzbekistan plans a “crypto mining valley” in Karakalpakstan, called the Besqala Mining Valley, to attract Bitcoin mining and related tech sector investment. President Shavkat Mirziyoyev’s decree grants cryptocurrency miners operating in the zone income tax exemption until Jan 1, 2035.
Key incentives include reliable grid access to Uzbekistan’s unified power system, plus additional electricity supplied by hydrogen power plants in Karakalpakstan. Miners will be allowed to sell mined digital assets on domestic and international crypto trading platforms, while Bitcoin-related companies must be licensed by the National Agency for Prospective Projects (NAPP). To become residents, firms must apply to the Besqala Mining Valley directorate.
The move comes as Uzbekistan issues mining permits to kick-start the industry. Earlier this year, it granted its first mining authorization to NexaGrid for facilities in the Bukhara region, ending months of regulatory uncertainty after NAPP adopted mining-permit rules over two years ago.
Regional context matters for trading: Kazakhstan’s reduced appeal after higher electricity rates, Kyrgyzstan halting mining over power shortages, and Turkmenistan legalizing crypto mining and trading in January all point to faster policy competition across Central Asia. Uzbekistan also says crypto payments remain prohibited, but it is allowing stablecoins for settlements this year—supportive for on-chain liquidity.
Bullish
A tax exemption through 2035, plus grid and hydrogen-power support, is a direct reduction in operating cost and regulatory risk for crypto mining. While this is not an immediate spot-coin catalyst, it can improve miner sentiment, attract new hashpower deployment, and tighten perceived policy uncertainty—factors that often support broader risk appetite in crypto.
Historically, when governments announce long-duration fiscal incentives for mining (or relax licensing), markets typically react in two phases: (1) short-term optimism among miners and related equities/derivatives, and (2) longer-term confirmation once installations and power contracts translate into sustained hash rate growth. Conversely, if energy sourcing or enforcement lags, the impact can fade.
Here, the decree’s long horizon (to 2035), explicit electricity arrangements, and a licensing path via NAPP make the plan more concrete than vague “future-friendly” statements. It may also shift regional competitive dynamics away from Kazakhstan/Kyrgyzstan toward Uzbekistan, potentially supporting mining-driven demand narratives (e.g., lower miner cost basis). Net effect: mildly bullish for near-to-medium-term sentiment, with longer-term effects depending on execution quality and real power availability.