IMF Rejects Pakistan’s Crypto Mining Subsidy Proposal

The International Monetary Fund (IMF) has rejected Pakistan’s proposal to provide subsidized electricity tariffs for cryptocurrency mining operations. The proposal, which aimed to boost electricity consumption and incentivize crypto-related industrial activity, was presented by the Power Division in 2024 but failed to gain traction with the global lender. The IMF cited concerns that such a move would create economic imbalances and distort the nation’s fragile energy market.

Secretary of Power Fakhray Alam Irfan briefed the Senate Standing Committee on Power, chaired by Senator Mohsin Aziz, on the ongoing discussions. According to Irfan, the IMF declined a subsidy framework on the grounds that it could further burden the already fragile energy sector and undermine pricing transparency. The Power Division’s original submission in September 2024 recommended a six-month power tariff at marginal cost for crypto miners and metal industries. The IMF only approved a scaled-back three-month version, citing risks to the broader power market.

In November 2024, officials presented a revised proposal for a targeted subsidy to encourage the use of surplus electricity during off-peak periods. This too was rejected, as the IMF viewed it akin to sector-specific tax holidays, which often introduce inefficiencies and distort market competition. Despite the pushback, Irfan confirmed that Pakistan remains in talks with international institutions to refine and possibly relaunch a more acceptable plan.

The Senate committee also debated a recent agreement with scheduled banks to reduce the nation’s circular debt stock. Senator Shibli Faraz criticized the deal, alleging that financial institutions had been pressured into compliance and warning that consumers would bear the brunt of repayment via future levies. Irfan countered that no new levies had been introduced. Instead, the existing Debt Servicing Surcharge will remain in place for the next five to six years, covering financing obligations.

Irfan disclosed that 58% of power consumers currently fall under the “protected” category, paying just Rs 10 per unit. Meanwhile, the government is investing in technology solutions to combat rampant electricity theft and to monitor industrial consumption more effectively. The Senate committee directed the Power Division to submit a detailed report on both the impacts of subsidies and anti-theft measures in the next session.

The IMF’s rejection highlights the regulatory challenges facing crypto mining in Pakistan, particularly around its high energy demands and questionable long-term value to the economy. While surplus electricity usage remains a priority for the government, balancing that with fiscal discipline and international lender expectations will remain a delicate task. Meanwhile, countries like Pakistan continue to position themselves as pro-crypto. In June, Bitcoin advocate Michael Saylor met with Pakistan’s Finance Minister to discuss integrating Bitcoin into national reserves and forming a regulatory framework.

Saylor pledged support, sharing insights on Bitcoin as a sovereign asset. Earlier, global crypto figures have backed Pakistan’s crypto efforts, with Zhao acting as a crypto advisor. Despite the setback, Pakistan continues to engage with international bodies to explore a more acceptable framework for crypto mining and energy utilization.