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Uzbekistan Legalizes Crypto Mining – but Only if Powered by Solar Energy

2 mins
Updated by Geraint Price
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In Brief

  • Uzbekistan has legalized tax-free solar crypto mining.
  • Those using the electrical grid face stiff tariffs.
  • The country has already built one solar facility out of a planned four.
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Uzbekistan has legalized cryptocurrency mining and made it tax-free – but only if it is powered by the sun.

A presidential order was issued this week to permit both foreign and local cryptocurrency mining on the condition that the mines use their own solar energy facility. The government will also exempt companies from paying income tax.

The new law states that miners wishing to use grid power must pay double, and surcharges will be levied during times of increased demand. 

New miners will need to register with the Uzbek National Agency for Prospective Projects.

Mining is the process whereby new “coins” of a cryptocurrency are awarded to a miner after they validate transactions, collect those transactions and order them into a new block, add that block to the public ledger, and broadcast the new block to the cryptocurrency node network. And bitcoin mining is an energy-intensive operation that requires large amounts of power.

Facilities need high photovoltaic conversion capabilities

To work efficiently, solar-powered facilities must have solar panels with high photovoltaic conversion capabilities. That is, the efficiency of conversion of light to electricity must be high, resulting in greater power generation for a given area of solar panel. The angle of the solar panels is also critical; the system must be designed such that the panel “follows the sun.” 

Utah-based CleanSpark is a cryptocurrency mining firm that uses “microgrids” to power its mining operations. They use a combination of renewable sources, including solar and hydroelectric power, to provide power to a single electricity plant, from which they feed power to their mining facilities. 

Last June, Manhattan Solar Partners announced partnerships with BIT5IVE LLC and Gmine to build mining data centers running off over one gigawatt of solar power.

Uzbekistan has been a regional leader in terms of renewable energy, launching its first renewable energy project last Aug, a 100-megawatt solar power plant. 

Uzbekistan deputy PM says solar makes ‘economic sense’

“We see great potential, and we will promote solar power. It’s not only fashionable, but it also makes economic sense for us,” said the country’s deputy prime minister. 

The plant is the first of 19 planned renewable power projects for the country and the first of four solar projects.

In contrast, Uzbekistan’s northern neighbor Kazakhstan still relies heavily on coal for much of its electricity. It banned cryptocurrency mining for putting too much strain on the grid but later changed its mind to tax miners more heavily than before.

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...
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