October 4, 2023 at 15:24 GMTModified date: October 4, 2023 at 15:24 GMT
October 4, 2023 at 15:24 GMT

Uzbekistan cracks down on crypto mining

Uzbekistan has introduced tight restrictions on cryptocurrency mining as it passes a historic new legislation.

Uzbekistan cracks down on crypto mining

Uzbekistan has introduced tight restrictions on cryptocurrency mining as its market supervisor has approved historic new frameworks.

Uzbekistan’s National Agency for Perspective Projects (NAPP) has issued a new order that limits crypto mining to those who have licenses. This means only legally approved entities can mine new Bitcoin ($BTC) in the country. 

“All mining operations and services are only possible after obtaining a permitting document and license in the prescribed manner,” the NAPP wrote.

New Uzbekistan crypto mining framework

The NAPP’s decision goes beyond limiting individual miners without licenses. Companies that mine cryptocurrencies are now forced to use solar power. The only exception is when tapping into Uzbekistan’s unified power system, which must be done under specific conditions yet to be outlined.

The regulatory board has also forced companies to allocate separate rooms exclusively for their mining equipment. This mining should only be carried out from the registered address provided by the firms. Miners will also have to pay fees, which will be established by the regulators. 

Uzbekistan’s new crypto laws are cracking down on privacy tokens as well. The watchdog has prohibited the mining of “anonymous” cryptocurrencies, especially focusing on those like Monero ($XMR). 
These privacy coins allow investors to disguise their identities and transactions, which have previously been used by scammers and money launderers. 

Uzbekistan’s crypto history

While this latest legal framework from Uzbekistan is comprehensive, it’s still ambiguous whether this is the country’s final stance on crypto or the framework for more extensive legislation.

The government, in the past, has rolled out similar mandates, especially targeting individual miners.

For instance, in April 2022, President Shavkat Mirziyoyev restricted locals from both cryptocurrency transactions and mining activities.

The same year, Uzbekistan also stopped its citizens from accessing foreign cryptocurrency exchanges and other token platforms. 

The country’s regulations prevented locals from participating in crypto trading on international platforms. This led to the websites of Binance, Huobi, FTX, and Bybit being blocked.

However, NAPP has recently greenlit one cryptocurrency exchange and nine other crypto trading platforms. Reports also suggest there are talks taking place between the regulatory body and exchanges including Binance, Huobi, and Bybit regarding potential relaunches in Uzbekistan.

Bitcoin halving

Uzbekistan’s new mining bill could have significant impacts for those in the country looking to leverage the next Bitcoin halving event in 2024.

The halving, set for 25 April 2024, is expected to slash the Bitcoin block reward from its current 6.25 Bitcoin to a mere 3.125 Bitcoin. 

Bitcoin’s mining difficulty is already suffering with it recently reaching new highs. This has implications for mining operations, making the activity less profitable. 

However, some analysts are speculating that BTC’s price will increase with the halving, due to it making the crypto rarer and subsequently more valuable. Meanwhile, others are more pessimistic that it won’t pump the price as much as previous events given the recent bear market. 

As of 4 October, BTC is trading at $27,384. The largest cryptocurrency is up 4% over the past seven days. 

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