According to a presidential decree published this week, Uzbekistan is encouraging people to mine bitcoin using solar energy and will exempt all crypto operations by domestic and foreign operators from income tax.
The country is blessed with a highly suitable climate for solar energy, having more than twice the sunshine hours of Northern Europe. Coupled with a much higher angle of the Sun, this makes solar energy actually viable in Uzbekistan without government subsidies.
Apart from the tax incentives, the decree will ensure that the mistakes of neighbouring Kazakhstan are not repeated here. Last year, Kazakhstan was the world’s second-largest centre for bitcoin mining after the United States but it was nearly all plugged in to the grid. The grid is largely powered by ageing coal plants and was unable to take the strain of the sudden extra consumption.
Uzbekistan, by contrast, is encouraging the miners to install their own solar panels and will charge double the normal rates if they want to use the grid. The rates can go even higher during times of peak demand. These measures will likely ensure the success of the project.
Well at least they are compliant with the ESG Mafia. The good thing about bitcoins produced with solar and wind electricity is that these coins are considered ‘sustainably sourced’ by the climate activists. The bad thing is, that solar and wind is volatile and costly and not the most efficient source of power in a hyper competitive bitcoin mining business.
The recent move follows previous cryptocurrency laws passed in Uzbekistan, beginning with the National Agency for Project Management banning of bitcoin purchase in December 2019. Since then things have become less despotic and seem to be slowly improving.
Perhaps as bitcoin spreads and people learn their true power, we will be able to put government in its place (preferably a bunker on mars) and start to reach our full potential. Until then we will take what we can get, and count it a good step forward.