Uzbekistan has picked an unlikely frontier for a push into crypto mining: the remote, impoverished Republic of Karakalpakstan. A presidential decree signed April 17 and effective April 20 establishes Besqala Mining Valley, a state-sanctioned zone where registered companies can mine digital assets, tap multiple energy sources and sell on both local and international platforms — so long as all revenue is routed into Uzbek bank accounts.
Why Karakalpakstan?
The move is explicit economic strategy, not coincidence. A 2025 UNDP report singled out Karakalpakstan for high poverty and a weak industrial base. Rather than expanding mining in already-developed regions, Uzbekistan is using capital-intensive industries to seed activity in underused land, hoping to turn scarcity into attraction.
What Besqala offers miners
- Tax relief: Resident companies are exempt from taxes until January 1, 2035.
- Ongoing fee: In lieu of taxes, firms pay a monthly levy equal to 1% of mining income to the zone’s directorate, established under Karakalpakstan’s Council of Ministers.
- Revenue rules: Mined assets can be sold domestically or abroad, but proceeds must be deposited in Uzbek bank accounts.
- Regulatory updates: Officials have been ordered to propose changes to the national tax code within two months, so finer details are still forthcoming.
Energy flexibility
The decree reverses Uzbekistan’s 2023 requirement that licensed miners run exclusively on solar. Besqala miners may now draw from renewables, hydrogen, and the national grid (grid power is allowed but priced higher). The broader fuel mix gives operators more deployment options, particularly for large-scale facilities.
Part of a larger play
Besqala isn’t standing alone. In November, Uzbekistan created a separate tax-free zone in Karakalpakstan targeting AI and data centers: foreign investors who commit at least $100 million receive full tax and duty exemptions through 2040. Officials expect that program alone to attract over $1 billion by 2030. Together, both zones underline a deliberate bet: offer cheap land, power access and regulatory clarity to lure capital-heavy tech infrastructure.
What it could mean
Crypto miners and data centers both need space, steady power and legal certainty — all of which Uzbekistan is attempting to provide in Karakalpakstan. For miners, the combination of long tax holidays, flexible energy options and a government-backed zone may be compelling, especially for operators targeting lower operating costs and clear repatriation rules. How attractive Besqala proves will depend on final tax-code changes, energy pricing, and how quickly investors move from interest to actual builds.
Image credit: Pexels; chart: TradingView.
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