A presidential decree has created a new special crypto mining zone, the Besqala Mining Valley, across the Republic of Karakalpakstan, formalizing a supervised framework for licensed mining companies and their revenues.
The decree, which came into force Monday, establishes a directorate under Karakalpakstan’s Council of Ministers to oversee the zone and to register legal entities as residents. Registered miners may operate within the zone using a mix of power sources, apply for resident status through the directorate, and sell crypto assets mined on national exchanges or on foreign platforms—including via direct contracts—and convert them into other liquid crypto assets.
To keep mining proceeds anchored in the domestic financial system, the framework requires that revenues from such sales be transferred into bank accounts in Uzbekistan. The decree also creates a financial incentive package: a tax exemption for activities in the zone until Jan. 1, 2035, balanced by a mandatory monthly payment equal to 1% of income from mining activity payable to the zone directorate. Officials were instructed to prepare draft amendments to Uzbekistan’s tax code within two months to reflect the new regime.
The measure revises earlier policy on mining. In 2023, national rules limited large-scale mining projects to solar power; the Besqala framework permits a broader range of energy inputs inside the zone, including renewables, hydrogen and grid electricity, while applying higher tariffs to grid-supplied power.
The launch of Besqala builds on Uzbekistan’s broader use of special economic zones to attract investment to Karakalpakstan, a region the United Nations Development Programme characterized in 2025 as having high poverty and limited industrial development. It also complements a separate initiative launched in November 2025 that established a tax-free zone for artificial intelligence and data center projects in Karakalpakstan. That AI zone offers discounted electricity and tax exemptions to foreign investors, with firms committing $100 million or more eligible for full tax and duty relief until 2040; authorities have projected the AI zone could draw more than $1 billion in foreign investment by 2030.
The Besqala Mining Valley signals Uzbekistan’s intent to centralize oversight of crypto-mining activity while using fiscal incentives and infrastructure concessions to lure investors into a strategically targeted, underdeveloped region. Readers are encouraged to verify details with official Uzbek sources and regulatory notices.