Karakalpakstan Proposes “Besqala Mining Valley” Where Crypto Miners Can Extract Oil and Gas
Cryptocurrency mining companies operating in the region of Karakalpakstan could soon be permitted to extract low-yield oil and gas to generate their own electricity. This pioneering initiative is outlined in a draft order drawn up by the National Agency of Perspective Projects (NAPP) to establish a special crypto zone named Besqala Mining Valley.
Under the proposed regulations, this designated mining territory will encompass the entirety of Karakalpakstan. Operations within the valley will be strictly limited to legal entities registered in Uzbekistan that have obtained explicit authorisation from the NAPP and secured official resident status within the zone.
Innovative energy solutions for miners
Authorised residents will be granted the flexibility to draw power from the national electricity grid alongside alternative energy solutions such as solar, wind and hydrogen facilities.
Crucially, the draft document introduces a provision for these firms to develop and exploit low-profit oil and gas fields, particularly in areas where existing hydrocarbon transport infrastructure is either non-existent or severely degraded.
Licensing and strict regulatory oversight
Electronic permits and registrations for the zone will be issued with a five-year validity period. To successfully qualify, companies must maintain a dedicated premises for their hardware, adhere strictly to safety protocols and disclose comprehensive data regarding their power sources.
The regulatory framework also sets out strict prohibitions to maintain market integrity. It explicitly bans hidden mining, the extraction of anonymous cryptocurrencies and any transactions involving previously circulated crypto assets.
However, the NAPP plans to allow the sale of newly mined digital currencies across both domestic and international exchanges, provided that rigorous buyer verification processes are followed and all proceeds are deposited directly into corporate bank accounts.
Finally, the document clearly defines the criteria for suspending or revoking operational licences. Deemed as severe violations are offences such as engaging in hidden mining, operating without an independent electricity meter and working from an unregistered address.
The draft proposal is currently open for public consultation, with comments and feedback being accepted until June 3.
