The government of Uzbekistan is regulating Bitcoin mining under strict rules.
Under Executive Order No. 63441, “On Approval of the Regulation on the Procedure for Registration of Cryptoasset Mining,” the government of Uzbekistan has given the green light to Bitcoin miners to register their activity and legally mine the cryptocurrency in the country.
However, this executive order states that Only those miners who use solar energy sources to mine cryptocurrencies will be duly certified.
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The Uzbek government has created a mandatory electronic registry in which Bitcoin mining companies must identify and register in order to receive the appropriate certificate from the authorities to carry out this activity.
Requirements for mining Bitcoin in Uzbekistan
The cryptocurrency mining certification to be issued by the Uzbek government can only be requested by a legal entity or legal person duly registered in the country and entered into the electronic register of miners.
In addition, this certification will be valid for one year, counted from its issuance and will be subject exclusively to a legal entity that “uses electricity produced by a photovoltaic solar station”, the executive order states.
The government of Uzbekistan requires that companies be certified as cryptomining companies owners of an installed and operational solar power station, ready for electricity generation. This station must only distribute power to the facilities of the government-authorized miner, so there is no room to supply other mining farms, even if it is with electricity produced with solar energy.
In this way, Uzbekistan requires cryptocurrency miners to use solar energy sources to sustain their activity efficiently and sustainably, if they want to receive cryptomining certification.
Furthermore, the government's executive order states that miners will only be able to mine Bitcoin and other cryptocurrencies in previously registered and authorized locations. The government reserves the right to revoke the crypto mining certification if miners fail to comply with or violate any of the established requirements or regulations.
Bans clandestine and anonymous cryptocurrency mining
Regarding hidden cryptocurrency mining, Uzbekistan stated that mining Bitcoin or other cryptoassets clandestinely is considered an illegal activity.
He also noted that mining of anonymous or privacy-based cryptocurrencies, such as Monero (XRM), is prohibited in the country. This is in order to ensure transparency in operations.
No taxes for mining Bitcoin
In favor of cryptocurrency miners, Uzbekistan has exempted crypto miners from paying taxes.
The Uzbek government indicated that crypto assets received as income from crypto mining activity “They are not subject to taxation and are not included in the tax base” or taxable in the country.
On the other hand, it points out that companies and miners are required to report the bitcoins and crypto assets mined and must sell these crypto assets only through platforms registered in Uzbek territory.
Energy rates for miners
In the executive order, the government also mentions that cryptocurrency miners can connect to the national power grid to ensure stability for cryptocurrency mining.
However, it requires the installation of an electricity measuring device compatible with the Automated System for Control and Accounting of Electric Energy in order to account for its consumption in the electrical grid and cover the corresponding energy rates.
In Uzbekistan, energy rates vary according to peak consumption and night-time demand.
Uzbekistan's relationship with cryptocurrencies
The Uzbek government is showing some affinity for cryptocurrencies again. Although the country's president, Shavkat Mirziyoyev, had legalized cryptocurrency businesses in 2018, a year later, in 2019, he banned citizens from buying crypto assets.
In May this year, Mirziyoyev signed a new decree to allow citizens and businesses to buy, sell and exchange cryptocurrencies starting in 2023.
According to the Centre for Alternative Finance at the University of Cambridge, by December 2021, Uzbekistan accounted for just 0,05% of the Bitcoin network's hash power globally.
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