Uzbekistan Welcomes Bitcoin Mining, But There's a Problem

In Uzbekistan, home to a population of 34 million, The National Agency of Prospective Projects (NAPP) has clarified its requirements for cryptocurrency mining operators. It only approves companies that use solar power to mine bitcoin or other cryptocurrencies.

The normative bill dated June 24 on the country’s government webpage provides for the confirmation of the “Guidelines for the Registration of Cryptoasset Mining,” and sets a finalization date of July 9. The second article of the document offers strong language:

“Mining can only be carried out by legitimate entities using electricity supplied by solar photovoltaic plants.”

To complicate matters further, miners should own solar photovoltaic power plants for the energy they will use.

The executive order also requires mining operators to obtain a certificate and register with the National Registry of Crypto Mining Companies — a process requiring a short list of documents that should take no more than 20 days from submission to a final decision by the licensing body. The certificate will be valid for one year after registration.

All cryptocurrencies generated from mining activities will be tax-free, although mining farms will face special tariffs on energy consumption imposed by the Uzbek government. However, trading activities of mined assets can only be carried out on trading platforms registered in Uzbekistan. Mining of anonymous cryptocurrencies will be prohibited.

In April 2022, the reconstituted NAPP became the sole crypto regulator in Uzbekistan with the mission of adopting a special crypto regulatory regime in the country. The move is one of a series of initiatives launched by the country’s president, Shavkat Mirziyoyev, to provide a regulatory framework for cryptocurrencies. In September 2018, Mirziyoyev signed a law prohibiting local companies from launching cryptocurrency exchanges in Uzbekistan. The law only provides legal status to cryptocurrency exchanges established by foreign legal entities.