Uzbekistan has announced the establishment of a " national mining pool " as a priority. The country's regulator of the cryptocurrency industry announced that miners who join the mining pool will enjoy lower electricity bills. The Central Asian country is also preparing to launch a licensed cryptocurrency exchange to enable miners to sell their coins.
Consolidating cryptocurrency mining capabilities
Uzbekistan's government agency, the National Projects Authority (NAPM), this week revealed its 2020 plan to regulate cryptocurrency transactions and implement blockchain technology. At a news conference on Monday, the agency said that the proposed mining pool will help strengthen the capacity of domestic and foreign miners at the national level.
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Local news outlet Spot reports that the agency's main motivation for making the decision was to ensure economic efficiency and increase the transparency and security of cryptocurrency mining in the country. NAPM believes that this will also increase the sector's energy efficiency and make the former Soviet Republic more attractive to foreign investors.
The establishment of a national mining pool is also part of a series of measures taken by NAPM to remove crypto miners from the shadow economy. Another of these project measures will be the launch of the country's first licensed digital asset exchange next week, where mining companies will be able to sell the digital currency they receive for processing crypto transactions.
Uznex, a platform operated by the Korean Kobea Group, is scheduled to officially open on Monday, January 20. Its website (currently in beta online) shows seven Bitcoin and stablecoin (USDT) trading pairs, including BCH / BTC and BCH / USDT. The exchange is based in the country's capital, Tashkent.
The Republic of Uzbekistan legalized cryptocurrency transactions and introduced a licensing system for cryptocurrency transactions through a special decree signed by President Shavkat Mirziyoyev in September 2018. Another decree issued by the Presidential Palace in July of the same year prepared for cryptocurrency-related activities and the implementation of blockchain technology.
Pool participants get better electricity rates
Despite these initial positive developments, Uzbekistan authorities have also taken steps that could have a negative impact on the country's nascent crypto industry. As reported by news.Bitcoin.com, a recently adopted amendment to the regulatory regime restricts individuals' access to cryptocurrencies. According to local media reports, an order issued by NAPM in early December effectively barred Uzbekistan citizens from buying and trading cryptocurrencies. They will only be allowed to sell cryptocurrencies on licensed exchanges in the country.
Domestic mines have also become targets. Another government decree provides for higher electricity prices. Under the new rules, miners will need to pay three times the normal price for their energy needs. Industry insiders warn that given the current price of cryptocurrencies, any increase of 1.7 times beyond the regular rate will actually reduce profitability to zero. Although the continued market recovery has improved the profitability of Bitcoin mining, electricity prices remain a major factor in the business.
However, this situation should get better as the government wants to establish a national mining pool. The project management agency opposed the government's decision to increase the price of electricity for miners. To remedy this disadvantage, the agency plans to allow members of the national mining pool to pay at standard rates. "I think this will be one of the main measures to encourage people to participate in this pool," said Vyacheslav Pak, NAPM's deputy director. At the same time, non-participating miners will be charged high electricity bills.
The regulator is currently stepping up efforts to establish new mining pools, and has drafted a draft decree for Uzbekistan's president with other agencies, which will be openly discussed in the next few days. Vyacheslav Pak emphasized: "We must do this in a timely manner so that investors preparing to come here will not be scattered to neighboring countries."