The new presidential decree published on April 27 will cause electricity prices pulled from the standard energy grid to increase by double.
The Uzbekistan new law will support the use of solar power in order to shift crypto miners away from coal. It’s an exciting idea that could help kickstart renewable energy projects within the country.
Related Reading | NFT Event Ticketing: How SeatlabNFT Is Building A Fairer Ticket Ecosystem For Fans, Artists, and Brands
The Central Asian nation is set to announce a series of cryptocurrency-friendly policies that will provide significant incentives for companies in the space. Waiving income tax for both foreign and domestic crypto companies is one of the crypto-friendly policies. In addition, crypto mining companies using solar energy will pay no tax.
Miners from Uzbekistan will have to pay more for electricity from the standard energy grid. They may also face additional tariffs during periods of high demand because their use qualifies as a commercial enterprise under this new law.
Even though there is no formal licensing for crypto mining businesses, they must register with the new Uzbek National Agency for Perspective Projects. In 2018, Uzbekistan legalized crypto trading, but only one exchange is licensed to operate so far. This is where local crypto miners sell the digital assets they generate.
The new regulatory framework will require crypto exchanges to perform know your customer (KYC) checks on crypto traders and keep the records for five years.
Uzbekistan Solar Incentive Will Help To Grow The Industry
In January 2020, a proposed piece of legislation would have created a national mining pool that would give discounted electricity to its members. However, it appears that new solar incentives will supersede those intentions. The new incentives will provide enough regulatory freedom to help the local industry grow.
The government hopes that crypto companies will install and operate their solar panels, taking pressure off the struggling country’s energy infrastructure.
The move was made in response to power outages earlier this year in neighboring countries, Kazakhstan and Kyrgyzstan. Many refugees, who were bitcoin miners, fled China to these countries after Beijing issued a blanket ban on mining activity last June.
In response to the influx in energy demands from crypto miners, Kazakhstan’s power grid experienced extensive disruptions. As a result, Uzbekistan and Kyrgyzstan’s business and residential sectors suffered extensively because both countries also rely on Kazakhstan’s power grid.
Despite the region’s abundant hydropower and carbon energy sources, all three countries were forced to purchase expensive power via an old Soviet energy grid to resolve the issues.
Related Reading | Lockdown Memories: Shanghai Locals Turn To NFT To Immortalize COVID-19 Ordeals
Kazakhstan went from housing around 7% of Bitcoin’s hashing power to owning more than 18% within two months after China’s ban. This means they were suddenly the second-biggest bitcoin mining country in the world, after the United States.
Uzbekistan mines far less bitcoin than other countries. In August 2021, the country contributed just 0.05% of the total hashrate. However, legalizing crypto mining using solar energy could change the future because now, crypto miners will not have to pay income tax.
Featured image from Pixabay, the chart from Tradingview.com
Source: https://bitcoinist.com/uzbekistan-offers-tax-benefits-for-crypto-miners/