Bitcoin miners forced for the first time to operate only on solar energy

A recently published executive order by the Government of Uzbekistan requires Bitcoin miners to generate the electricity they consume through solar energy. If they do not comply with this condition, they will not be able to mine in the national territory. It is the first time that a government has required this condition from cryptocurrency miners.

Bitcoin miners and other cryptocurrency networks they will have to comply with a registration with the corresponding government authorities to carry out this activity. The certificate will have to be renewed annually.

The document published by the Uzbek authorities reads as follows: “mining is carried out exclusively by a legal entity using electricity generated by a photovoltaic solar station.” But that’s not all, but the solar power generation complex must belong to the mining farm and cannot be redirected to supply other farms.

While farms must be energy self-sustaining, these They have the possibility of connecting to the local electrical system to achieve the most stable electrical flow possible. However, farms will have to install a dedicated electricity meter. In addition to this, energy consumption during peak hours (between 5pm and 10pm) will have special rates that have not been specified in the document. Such rates will double your cost for energy consumed between 12:00 am and 6:00 am.

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Mining farms will only be able to work in the location declared in the registry. If the owners intend to move their facilities or expand into another establishment, it will be necessary to modify the registry or create a new one.

Solar power is not the only condition imposed on Bitcoin miners

There are not only conditions related to electricity consumption for Uzbek miners, but also to the conversion and use of the bitcoins or cryptocurrencies they mine. One of them consists in reporting to the authorities every mined bitcoin.

Fortunately, the cryptocurrencies obtained as a product of mining will not be subject to the payment of taxes. However, the document also makes an exception with respect to “other activities carried out by the miners” that were taxable.

Income earned from other activities (apart from mining) carried out by miners, according to the legislation of the Republic of Uzbekistan, is subject to taxation in accordance with the generally established procedure.

Executive order of the Government of Uzbekistan.

Although the cited text does not specify which activities would be subject to taxes, it can be inferred that the exchange or sale of the cryptocurrencies obtained, services related to cryptocurrency mining such as cloud mining, the sale of hardware or equipment to be replaced, among others, could be taxable.

In this regard, it should be noted that the sale or exchange of mined bitcoins or cryptocurrencies will be allowed only through platforms registered in Uzbek territory.

Privacy-Focused Cryptocurrencies Still Banned

Bitcoin (BTC) and cryptocurrencies such as ether (ETH) from Ethereum or ravencoin (RVN), for example, can be mined without any problem, as long as the miners comply with the aforementioned conditions. The exception to this rule are cryptocurrencies focused on privacy and anonymity, which do not have government approval.

The mining of cryptocurrencies such as monero (XMR), zcash (ZEC) or others that use privacy protocols such as mimblewimble, among which are grin, beam and litecoin (LTC), which added this protocol as an option for its users, is prohibited strictly on Uzbek territory.

The Government of Uzbekistan has been very cautious about opening up to the use of cryptocurrencies and their issuance within the country. CriptoNoticias reported on a presidential decree announced in May that would open the compass to the sale of cryptocurrencies in this nation, provided that a series of regulations that would come into force on January 1, 2023 are complied with.

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