The Republic of Uzbekistan has approved the whole region of Karakalpakstan to become a crypto mining zone. Moreover, it will allow many companies that register to get total tax exemptions until the year 2035. Above all, these companies will also have the right to trade mined digital assets internationally.
President Shavkat Mirziyoyev endorsed Presidential Resolution No. PQ-143 on April 17, with the decree taking effect on April 20. The measure formally establishes the “Besqala Mining Valley,” a special economic zone that covers all of the Republic of Karakalpakstan in northwestern Uzbekistan.
Legal entities that register as zone residents will be fully exempt from all taxes and state fees on mining income until January 1, 2035. In exchange, they will pay a 1% monthly fee on mining revenue to a newly created Besqala Mining Valley Directorate, with proceeds flowing directly into Karakalpakstan’s regional budget.
What the decree permits
The framework gives people in the area a relatively broad range of rights to operate. Mined crypto assets can be sold on local exchanges, international exchanges, or direct contracts by companies. They may also change those assets for other liquid cryptos. All proceeds must be repatriated to bank accounts in Uzbekistan, with authorities having oversight of capital flows.
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The decree signals a marked shift from earlier restrictions on energy. In 2022, the government mandated the operation of licensed miners with solar photovoltaic plants only. Also, those who connected to the grid faced a double tariff punishment.
The flexibility to utilize renewable energy, hydrogen power plants, and the national grid means that only the use of the national grid will attract higher tariffs in the Besqala framework. An online registration is made mandatory for all mining activities, but no license is required.
Eligible companies must be incorporated in Karakalpakstan and hold a minimum charter capital of roughly $170,800. Anonymous mining and the use of privacy-preserving crypto assets are prohibited. Individuals with any history of financial crime or corruption are barred from management roles in zone companies.
Why Karakalpakstan, and why now
The choice of Karakalpakstan is politically significant. The autonomous republic covers roughly 40% of Uzbekistan’s total land area but holds only about 2 million of the country’s 36 million people.
A UNDP report of 2025 describes the region as having poverty rates and a lack of industries. The Aral Sea was the world’s fourth largest lake and a major economic driver. Half a century of Soviet-era diversion drained it almost completely, leaving behind toxic dust, increased cancer rates, and a collapsed fishing industry.
The region’s economic distress has historically erupted into political tension. In July 2022, Karakalpakstan saw Uzbekistan’s worst civil unrest since 2005, when proposed constitutional amendments that would have stripped the republic of its formal right to secede triggered protests in the regional capital, Nukus. At least 21 people died and over 240 were injured before a state of emergency was declared.
Mirziyoyev personally flew to the region, withdrew the amendments, and publicly pledged deeper investment. The Besqala Mining Valley is the latest installment of that pledge, this time backed by crypto capital rather than state transfers alone.
A slow-building regulatory path
Uzbekistan’s journey to this decree has been slow. The country first engaged with digital assets through a 2018 presidential decree legalizing crypto trading, then reversed course with a 2019 ban on residents purchasing crypto.
According to the 2022 framework, the National Agency for Prospective Projects (NAPP) was to oversee all resident transactions, which would need to flow through licensed domestic providers from January 2023.
Mining permit rules followed in September 2023, yet no company applied for more than two years. Uzbekistan did not issue its first legal mining permit until February 2026, when Tashkent-registered firm NexaGrid received authorization. The Besqala decree is designed to turn that single permit into a pipeline.
Central Asia’s widening mining race
The wider regional context adds urgency. Karakalpakstan borders Kazakhstan, which once contributed roughly 13% of global Bitcoin hashrate before regulatory tightening pushed miners elsewhere. Kyrgyzstan and Turkmenistan have both formalized their own crypto frameworks, Turkmenistan’s effective January 1, 2026.
Uzbekistan is now the fourth of five Central Asian nations with a structured digital asset framework, with only Tajikistan retaining a ban. In late 2025, Uzbekistan also announced plans to integrate stablecoins into its formal payment system and allow tokenized stocks and bonds under a regulated framework starting in 2026.
Whether the Besqala Mining Valley attracts serious international mining operations will depend on how quickly the directorate processes applications and whether the promised energy infrastructure materializes.
The incentives are the most competitive Uzbekistan has ever offered. The region’s history suggests promises and delivery in Karakalpakstan do not always align, but for the first time, Tashkent is betting that crypto can help close that gap.
