Pakistan’s Bitcoin Mining Plan Hits Roadblock as IMF Blocks Power Subsidies

Key Insights

• The IMF has rejected Pakistan’s proposal to offer subsidized electricity for Bitcoin mining.

• Pakistan’s plan aimed to offer 2,000 megawatts of surplus winter electricity to attract foreign investment.

• Despite the IMF’s rejection, Pakistan is still reviewing the plan with the World Bank and other international partners.

Pakistan’s ambition to become a Bitcoin mining hub has just hit a major obstacle. 

According to the initial proposal, the country planned to allocate some of its surplus electricity to crypto miners and data centers at subsidized rates. However, this move has been rejected by the International Monetary Fund (IMF), over issues with market distortion, legal ambiguity and infrastructure risks.

The decision has just put a pause on the country’s digital transformation strategy, and here are the implications.

Pakistan’s Crypto Mining Strategy

Earlier this year, Pakistan announced a plan to allocate 2,000 megawatts of excess electricity. This is especially available during winter months to Bitcoin mining and AI data centers. 

The initiative was designed to take advantage of this unused energy and attract foreign investment into the country’s struggling economy.

The Pakistan Crypto Council collaborated with the Ministry of Finance and drafted a plan. This was to include a marginal-cost electricity tariff of 22–23 Pakistani rupees per kilowatt-hour (about $0.08/kWh).

This energy would then be offered to high-energy industries like crypto mining and copper smelting in a move that they hoped would stimulate industrial demand while reducing energy waste.

However, that strategy has now been challenged by the IMF.

IMF Says No to Subsidies

According to Pakistan’s Secretary of Power, Fakhre Alam Irfan, the IMF has not approved the initiative. Moreover, according to a recent briefing to the Senate Standing Committee on Energy, Irfan explained that the IMF believes such subsidies could destabilize the energy market. 

The fund compared the proposed power incentives to sector-specific tax breaks that have historically created imbalances in Pakistan’s economy.

The IMF’s main issue with the plan is that distorted pricing for electricity, even when surplus power exists, could damage fair market competition. It could also create legal complications, especially in a country that is already struggling with power sector inefficiencies.

In addition, Irfan noted that all major energy policies now require IMF approval as part of the country’s financial support agreements with the fund

The Plan Itself Might Be Infeasible

Beyond pricing, the IMF pointed out some more legal and regulatory issues. 

For example, while crypto mining was technically legalized in Pakistan in May of this year, it still exists in a legal grey area. The current regulatory framework is underdeveloped, and investors are left with little protection and unclear compliance rules.

In addition to this, the country’s electricity grid is also fragile. 

High transmission losses, uneven power distribution and frequent outages make Pakistan a high-risk environment for an industry that relies on stable power. Even with subsidies, mining one Bitcoin in Pakistan would cost around $132,000 at current commercial electricity rates.

This is far more than averages elsewhere around the world, and is less than the actual market value of Bitcoin itself. These numbers show that without major reforms in pricing and regulation, Pakistan’s crypto mining vision is financially infeasible.

The Plans Are Not Shelved Yet

Despite the IMF’s rejection, Pakistan isn’t giving up. 

Irfan clarified that the proposal is still under review by the World Bank and other international partners. The government intends to revise the plan more closely with realistic expectations and economic policies.

Overall, Pakistan’s plan to use surplus energy for Bitcoin mining was ambitious and forward-looking. However, the IMF’s refusal to approve power subsidies serves as a reality check for a country still tiptoeing around economic uncertainty and a fragile energy sector.

While the vision isn’t dead, it is clear that Pakistan must build a stronger foundation before entering the mining game. Until this foundation exists, the bitcoin mining plan appears doomed to remain in limbo.