Uzbekistan has reportedly allowed local firms to mine cryptocurrency using solar energy following a presidential decree published on May 4, 2022. Aside from this, all domestic and foreign crypto companies will be exempt from income tax as said in the decree.
Through the presidential decree, the Tashkent government urges crypto mining companies to install their solar panels as means to harness energy for mining digital assets. However, as an alternative, mining companies can still be connected to the power grid if they pay double the regular price.
All the local crypto mining establishments are not required to obtain a special license to function within the country’s borders but they should be registered with the newly formed government body called Uzbek National Agency for Perspective Projects.
The new decree urges local crypto mining companies to opt for alternative energy sources to cut back costs. Although these establishments are still allowed to connect to the nation’s power grid, a fee will be imposed that’s double the price. Higher charge rates will also be implemented during peak demand periods.
Regulations will be imposed since cryptocurrencies including Bitcoin, Ethereum and Cardano are mined through consensus mechanisms such as proof of work or proof of stake, which require high energy consumption.
Digital assets were legalised in the country in 2018 but only for domestic exchanges. However, residents were still prohibited from purchasing digital assets in late 2019. This did not prevent them from selling cryptocurrency since that remained legal.
Neighbouring nations such as Kazakhstan have already cracked down on mining operations after crypto mining companies have strained its power grid that’s powered by coal power plants.
The country has imposed reporting requirements on the industry’s energy usage 30 days before the company can even start operations. Additionally, they also spearheaded sustainable renewable energy projects such as solar and wind power plants for their advocacy.
Moreover, illicit crypto mining operations in Kazakhstan were shut down by raids led by the Financial Monitoring Agency which seized over 67,000 pieces of equipment. There also have been proposals for hiking prices and increasing taxes for crypto mines that are based in the country.
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