Turkmenistan, the only neutral country in Central Asia, officially legalized cryptocurrency mining and trading on New Year's Day, establishing a licensing system regulated by the central bank. This policy signifies a major shift in Turkmenistan's national economic policy. According to the latest reports, the bill incorporates virtual assets into civil law, allowing registered and approved companies and individuals to participate in cryptocurrency mining and trading. However, it still does not recognize cryptocurrencies as a means of payment, legal tender, or securities, and the domestic internet and information flow remain under high government control. Why is Turkmenistan gradually opening up cryptocurrency mining and trading? The following is an analysis report.
The relationship between Turkmenistan's energy resources and mining costs
Turkmenistan possesses abundant natural gas resources, and its electricity production capacity often exceeds domestic consumption. Cryptocurrency mining is a high-energy-consuming activity, and with proper planning, this energy surplus can be used to make mining economical. Other energy-rich countries globally (such as Kazakhstan) have also attracted numerous miners seeking low-cost electricity. For Turkmenistan, policy relaxation allows for the rational utilization of idle energy resources, converting energy costs into economic benefits. This represents a viable diversification strategy for an economy heavily reliant on natural gas exports.
Open mining can attract foreign investment.
Turkmenistan's economy is heavily reliant on natural gas exports, particularly to China, resulting in a relatively singular economic structure. In recent years, the global crypto industry has developed rapidly, with digital assets and mining emerging as new areas attracting foreign and technological investment. Therefore, the introduction of a legalization and regulatory framework is not only a response to global trends but also potentially an attempt to attract foreign investment and improve technological levels through institutionally protected emerging industries.
Closed countries seek greater economic participation on the global stage.
While Turkmenistan retains control over the internet and information flow, the legalization of cryptocurrency mining and trading represents a degree of openness. This aligns with international digital asset regulations and may also reflect the government's intention to gradually integrate into the global digital financial system while maintaining political control. For example, the introduction of e-visas is also part of this trend, aiming to improve the mobility of foreign talent and facilitate investment.
Turkmenistan's legalization of cryptocurrencies this time adopted a strict regulatory approach, not recognizing them as a means of payment. This reflects the government's continued efforts to maintain control over the financial system and monetary sovereignty, avoiding risks that cryptocurrencies might pose to its monetary policy and capital flows. The high volatility and risks associated with cryptocurrencies in other countries may also lead their governments to adopt a more cautious legal framework, rather than complete liberalization.
Why do closed countries believe that opening up mining can boost their economy?
Why has Turkmenistan opened up mining? I believe it's based on the following points.
- Energy advantage and cost-driven factors: Abundant energy resources and low mining costs enable closed countries to convert their resource advantages into economic benefits.
- Economic pressure: An economic structure that relies on a single export needs new industries to support growth and attract foreign investment.
- Economic considerations for global competition: Even with political isolation, there is a conscious effort to secure a place in the global emerging technology economy.
- Gradual opening under risk control: Legalization does not equal liberalization, and a control framework can mitigate the risks of financial and capital outflows.
Turkmenistan's policy shift reflects a pragmatic strategy of maximizing its energy advantages and exploring new economic opportunities while maintaining a highly controlled political system and information environment. Bringing cryptocurrency mining and trading under legal regulation is not a complete market opening, but a controlled attempt to introduce emerging industries with spillover benefits without compromising national sovereignty. This choice highlights the survival strategies of small countries caught between economic growth pressures and a challenging international environment.
What are the implications behind Turkmenistan's legalization of cryptocurrency mining and trading, the only neutral country in Central Asia? This article first appeared on ABMedia, a ABMedia .
