The country hopes to release the pressure off its power plants by this move
By Shashank Bhardwaj
A presidential decree published this week in Uzbekistan will now allow enterprises to mine cryptocurrency using solar energy and exempt all crypto operations by domestic and foreign companies from income tax.
Crypto mining is the process by which new bitcoins and other cryptocurrencies generate new coins and validate transactions. It entails massive, decentralised networks of computers all over the world that verify and safeguard blockchains. Computers in the network are rewarded with new coins in exchange for contributing their processing power. Typically, mining requires large amounts of energy and power.
The administration of Tashkent is now also inviting miners to use solar panels to power their farms. In the future, Uzbekistan will also exempt income tax for both foreign and domestic crypto firms. Although no license is required for mining, the company must be registered with the Uzbek National Agency for Perspective Projects, which was recently established. Local miners will be charged twice as much for electricity consumed from the standard grid. They may also be subject to higher fees during peak demand periods.
The Central Asian country has a love-hate relationship with cryptocurrencies. Despite the fact that Uzbekistan legalised cryptocurrency trading in 2018, residents were prohibited from purchasing digital assets in late 2019, although selling them remained legal. The government then eased some limitations about a year ago, allowing Uzbeks to engage in crypto transactions involving crypto assets and tokens in exchange for domestic and foreign currencies. However, Uzbeks are still forbidden from purchasing bitcoin or altcoins under current laws, which do not apply to foreigners.
Neighbouring country Kazakhstan, which, after the United States, became the world's second-largest bitcoin mining centre last year, has also cracked down on mining after such operations stressed the country’s power system, which is dominated by ageing coal power plants.
Shashank is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash
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