Crypto mining employing solar energy legalized in Uzbekistan

A presidential decree published this week ben in Uzbekistan says that the companies in the country will be allowed to mine cryptocurrencies by employing solar power. The decree makes it clear that these solar powered crypto operations by both domestic and foreign companies will be exempt from the income tax.

The objective behind this presidential decree is that the Uzbekistan government would like the crypto miners in the country to power their farms by installing their own solar power panels.

The decree says that crypto mining firms can be connected to the power grid but they will have to pay twice the regular price. There will be more disincentives for not using renewable energy. The companies will be levied with extra surcharges also during peak consumption periods.

The decree also mentions that miners will not need to obtain any license. They just need to be registered with the Uzbek National Agency for Perspective Projects which was formed recently. Few cryptocurrencies require large amounts of electricity in their mining and processes. This is because they are created by a proof of work process that requires computers to mine the currency by solving complex puzzles. Bitcoin is one of such crypto currencies.

In 2018, Uzbekistan legalized cryptocurrency trading in the country but ensured that it could be done only through domestic exchanges.

Last year, another Central Asian country, Kazakhstan had cracked down on crypto mining activities because it had strained its power grid and almost brought it to failure. Kazakhstan had once been the second second-largest centre for bitcoin mining after the USA in the world.

‘The Strategy for the Transition to a Green Economy for 2019-2030’ of Uzbekistan wants to reduce the country’s dependence from gas based energy sources to 50 per cent of its total energy demand. The country wants to add 5GW of solar power by the end of this decade besides developing wind and nuclear energy.