Uzbekistan Launches the Beshkala Mining Valley
Under a presidential resolution that took effect on April 20, 2026, Uzbekistan has designated the entire Republic of Karakalpakstan as the Beshkala Mining Valley. This creates a regulated environment for cryptocurrency mining while linking the initiative to the region’s economic development plans. The resolution allows licensed mining companies within the zone to use electricity from the national grid, renewable energy sources such as solar power, and hydrogen-based power generation. It also establishes a legal pathway for miners to sell their digital assets through Uzbekistan’s licensed crypto exchanges, foreign trading platforms, direct agreements, or by converting them into other liquid crypto assets. Companies must transfer revenue from crypto asset sales to bank accounts held in Uzbekistan, keeping transactions within the country’s regulated financial system.
Regulatory Framework and Incentives
Tax Exemptions and Power Options
The resolution exempts income earned from mining activities from taxes and mandatory payments until January 1, 2035, providing a major financial incentive for companies considering investment. Licensed miners can draw power from the unified electricity grid alongside renewable energy and hydrogen-based generation—a significant shift from earlier rules introduced in October 2023, which largely limited mining to solar power and required official authorization before operating. The updated approach gives operators more flexibility while preserving licensing requirements. Uzbek law continues to define crypto mining as the computational process used to maintain distributed ledgers by validating blocks and preserving network integrity, and the activity remains restricted to legal entities rather than individual miners.
Financial Oversight and Revenue Requirements
Residents of the mining valley may sell mined digital assets through domestic exchanges, overseas trading platforms, direct contracts, or by exchanging them for other liquid crypto assets. Regardless of where the assets are sold, proceeds must ultimately be transferred to bank accounts located in Uzbekistan. This framework keeps mining-related revenue within the domestic banking system while allowing access to international markets. According to a separate decree signed on April 17 and effective from April 20, residents must also pay a monthly fee equal to 1% of mining income to the zone’s directorate, even as they benefit from tax exemptions running through early 2035.
The Role of Karakalpakstan in Uzbekistan’s Tech Strategy
Only legal entities registered in Karakalpakstan will qualify for resident status within the Beshkala Mining Valley. Businesses must first obtain resident status through the zone’s directorate before applying for a crypto mining license under the supervision of the National Agency for Perspective Projects, the authority responsible for regulating the sector. The dedicated directorate will manage the mining valley, process applications, and supervise implementation of development policies. Mining companies are also permitted to reuse excess heat generated by their equipment for greenhouse farming on agricultural land, creating an additional use for energy produced during operations. The mining initiative follows another technology-focused program for Karakalpakstan approved in 2025, which established a separate tax-free zone for artificial intelligence and data center projects. That program offered discounted electricity prices and tax incentives to foreign investors, with investments of at least $100 million qualifying for exemptions from taxes and customs duties until 2040. Officials stated the AI and data center project was designed to attract more than $1 billion in foreign investment by 2030, placing the new crypto mining zone within a series of long-term development initiatives targeting the region.
