Uzbekistan has tapped an unlikely engine for foreign capital and jobs: crypto mining. A presidential decree signed April 17 (effective April 20, 2026) establishes Besqala Mining Valley — a state-sanctioned crypto-mining zone inside the autonomous Republic of Karakalpakstan, a region long marked by poverty and limited industry.
What the decree allows
- Registered companies granted “resident” status in Besqala can mine digital assets and sell them on domestic exchanges and foreign platforms.
- Firms may use a mix of energy sources — renewables, hydrogen and even the national grid — reversing a 2023 rule that had required licensed miners to run exclusively on solar.
- All proceeds from mining must be deposited into Uzbek bank accounts.
Big financial incentives (and one recurring fee)
- Residents get generous tax relief: no taxes until January 1, 2035.
- In lieu of conventional taxes, companies must pay a monthly fee equal to 1% of mining income to the zone’s directorate, an authority established under Karakalpakstan’s Council of Ministers.
- National tax-code updates are expected within two months, so some details may change as regulations are finalized.
Why Karakalpakstan?
The move is explicitly strategic. A 2025 UN Development Programme report highlighted Karakalpakstan as a region with high poverty and little industrial base — precisely the kind of place Uzbekistan is targeting to channel new investment. Besqala isn’t an isolated experiment: last November the government created a separate tax-free zone in the region for AI and data centers, offering full tax and duty exemptions until 2040 for foreign investors who commit at least $100 million. Officials estimate that initiative alone could attract more than $1 billion in foreign investment by 2030.
What this signals
Uzbekistan is packaging low-cost land, power access and regulatory clarity to attract capital-intensive industries that need scale: crypto mining and data infrastructure. For miners, the appeal is clear — long tax holidays, legal certainty and access to multiple power sources. For the state, the aim is economic development in an under-served region and formalizing crypto-derived revenues through Uzbek banks.
Risks and open questions
- Energy: allowing grid electricity eases operations but raises questions about power demand and local grid strain; grid power will be priced higher than other sources.
- Capital control: the requirement that revenues be routed through Uzbek banks centralizes financial flows and could deter some operators who prefer more decentralized or offshore arrangements.
- Regulatory details: the tax-code revisions due soon will be critical to understand the full economic and legal framework.
Taken together, Besqala Mining Valley and the adjacent AI/data-center zone show a deliberate push by Uzbekistan to convert underutilized land and cheap power into a magnet for foreign investment in next-generation industries. How much mining capacity will arrive, and how the region’s economy and infrastructure absorb it, remain developments to watch.
(Image: Pexels; chart: TradingView)
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