Uzbekistan will create a special zone for cryptocurrency mining in the Karakalpakstan Autonomous Republic and grant tenant companies tax exemptions until Jan. 1, 2035.

Cryptopolitan, a blockchain outlet, reported on April 21 local time that President Shavkat Mirziyoyev signed a presidential decree containing the plan.

The new special economic zone is called the Beskala Mining Valley. Karakalpakstan, the target area, lies in northwestern Uzbekistan on the border with Kazakhstan. Kazakhstan was once a mining hub accounting for about 13 percent of global bitcoin hashrate, meaning Uzbekistan is moving to attract the industry by creating a separate mining zone in an adjacent area.

Cryptocurrency mining income earned by mining companies in the zone will be exempt from tax. Tenant companies will be able to use Uzbekistan’s unified power grid without limits. Remaining power needed for mining equipment will be supplied by a hydrogen power plant to be built in Karakalpakstan.

Tenant companies can sell the digital assets they mine on cryptocurrency trading platforms inside and outside Uzbekistan. They must obtain a licence from Uzbekistan’s crypto market regulator, the National Agency for Perspective Projects (NAPP), and submit an application to the agency in charge of the Beskala Mining Valley.

Uzbekistan issued its first mining permit in February. Nexagrid, the local company that received the permit, plans to build a mining facility in the southwestern Bukhara region. The move aligns with a trend of Uzbekistan picking up speed again in fostering the mining industry.

Even so, tightening the system did not immediately lead to an expansion of the industry. The National Agency for Perspective Projects drew up rules for issuing mining permits more than 2 years ago, but Uzbekistan has had no legally registered cryptocurrency mining sites so far.

Competition among Central Asian countries over mining policies is also continuing. Kazakhstan has become less attractive for mining due to higher electricity tariffs, but eased some restrictions last autumn. Kyrgyzstan halted mining last winter due to a power shortage, then said in spring it would resume. Turkmenistan legalised cryptocurrency mining and trading under a law that took effect in January. Uzbekistan also bans cryptocurrency payments, but said it would allow the use of stablecoins for settlement purposes this year.