Block reward mining gets tax holiday in Uzbekistan

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Uzbek President Shavkat Mirziyoyev is set to change how block reward mining is handled in Uzbekistan under a new decree establishing a special mining zone that would offer major tax benefits to miners while encouraging them to use clean energy.

The province of Krakalpakstan will be home to the Besqala Mining Valley, a project designed to bring in investors, open up job opportunities, and support the growth of renewable energy in the country.

According to the latest decree, as reported by The Block, companies setting up operations within the new zone will no longer be mandated to pay taxes on their mining income until 2035. However, the Uzbek government noted that only businesses that are officially registered and operating within Karakalpakstan can qualify for this benefit.

Furthermore, mining operations in the zone will be allowed to run on different types of renewable energy apart from solar power, marking a shift from earlier rules that limited block reward mining to solar-based systems.

Businesses working in the zone will also be able to sell their mined digital currencies on local and international exchanges. However, the government noted that earnings from these sales should be transferred through banks inside Uzbekistan.

On top of this, to give back to Karakalpakstan for hosting block reward mining activities, participating firms will have to contribute a small portion of their earnings—just 1% monthly—to support the budget of the region.

Meanwhile, Mirziyoyev granted the National Agency for Perspective Projects the power to issue permits to businesses that will operate in the Besqala Mining Valley, while a special management body will oversee daily operations in the zone, including ensuring that stringent regulations are enforced to prevent illicit financial activities, particularly money laundering.

The creation of Besqala Mining Valley came months after the national government unveiled an incentive program aimed at drawing over €85 million ($99.5 million) in foreign investment into artificial intelligence (AI) and data infrastructure.

The program, announced in November 2025, forms part of Uzbekistan’s efforts to expand its role in advanced technologies and digital services, with officials prioritizing AI as a key area for economic growth.

Similar to the block reward mining decree in Karakalpakstan, the government is also offering tax incentives and access to low-cost electricity for businesses venturing in AI.

The focus on AI is supported by ongoing improvements in the country’s digital infrastructure, including upgrades to fiber-optic networks and telecommunications systems.

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