Bitcoin miners in Uzbekistan will have two choices: pay double for electricity or go green and be rewarded with reduced taxes.
According to Reuters, miners who invest in their own solar panel systems will be exempt from paying federal taxes, while those who continue to rely on the national power grid will have to pay double the regular rates, plus surcharges during peak hours.
The high energy demand needed to mine cryptocurrencies has become a major climate issue, especially in the case of Bitcoin and Ethereum, both use the proof-of-work consensus algorithm to solve complex mathematical equations. With millions of computers working together to solve such equations, the impact of high energy demand has been felt in some parts of the world.
Last year, the Chinese government, citing regulatory and environmental concerns, banned cryptocurrencies and any mining-related activities within its borders. As a result, many miners were pushed to other countries, such as Uzbekistan and Kazakhstan, where energy was cheaper and regulations were scarce or non-existent.
These countries that received a large amount of Bitcoin mining companies that left China are now adjusting, creating an enabling legal environment and redesigning the legal framework to better accommodate these miners in the long term.