A region long marked by poverty and sparse industry is getting an unusual shot at foreign money — through crypto mining.
Karakalpakstan Opens Its Doors
Uzbekistan has designated the autonomous Republic of Karakalpakstan as the home of a new state-sanctioned mining zone called Besqala Mining Valley.
A presidential decree signed April 17 and effective April 20 sets out the rules: registered companies can mine digital assets, tap into a mix of energy sources, and sell what they mine on both domestic exchanges and foreign platforms.
The catch — all revenue must land in Uzbek bank accounts.
The United Nations Development Programme flagged Karakalpakstan in a 2025 report as a region struggling with high poverty rates and little industrial base. That context matters.
Uzbekistan isn’t placing this zone in an already-thriving area. It’s using the mining industry to push economic activity into a place that hasn’t attracted much of it on its own.
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Uzbekistan creates a state-backed crypto mining zone with tax breaks. pic.twitter.com/M7wNVUUQrI
— Whale Insider (@WhaleInsider) April 22, 2026
Tax Breaks Run Through 2035
The financial terms are designed to draw serious operators. Companies granted resident status inside the zone pay no taxes until January 1, 2035. In exchange, they owe a monthly fee of 1% of their mining income to the zone’s directorate — a body set up under Karakalpakstan’s Council of Ministers.
Officials have also been told to propose updates to the national tax code within two months, so the full picture isn’t final yet.
Energy rules have also been loosened. Back in 2023, Uzbekistan required licensed mining firms to run entirely on solar power. The new decree drops that restriction.
Miners inside Besqala Mining Valley can now draw from renewable sources, hydrogen, and the national grid. Grid electricity comes at higher rates, but the option is on the table — something that wasn’t allowed before.
A Broader Investment Push Takes ShapeThe mining zone isn’t a standalone move. Reports indicate Uzbekistan launched a separate tax-free zone in Karakalpakstan last November aimed at artificial intelligence and data center projects.
Under that program, foreign companies putting in $100 million or more receive full tax and duty exemptions until 2040. Officials expect that initiative alone to pull in more than $1 billion in foreign investment by 2030.
Taken together, both zones point to a deliberate strategy — use Karakalpakstan’s low-cost, underdeveloped land as bait for capital-heavy industries.
Crypto mining and data infrastructure require land, power, and regulatory clarity. Uzbekistan is betting it can supply all three.
Featured image from Pexels, chart from TradingView