IMF Rejects Pakistan’s 2,000MW Crypto Mining Power Plan

The International Monetary Fund (IMF) has rejected Pakistan’s proposal to offer subsidised electricity tariffs for crypto mining operations. The government is still engaged with international institutions to refine the plan.

“As of now, the IMF has not agreed,” said Secretary of Power Dr. Fakhray Alam Irfan, during a session with the Senate Standing Committee on Power. The IMF has warned that the plan could add strain to the power sector. Dr Irfan told the committee that the agency is concerned about market distortions over Pakistan’s subsidised energy rates proposal.

Last month, the IMF questioned Pakistan’s power push for Bitcoin mining, raising concerns over legal issues and power strain. The international financial body laid out several concerns, including the legality of crypto mining in Pakistan and the additional strain on the already burdened power grid.

Further, the fund warned about resource distribution and knock-on effects on power tariffs. The IMF noted that Pakistan did not consult the fund ahead of the announcement.

In May, Pakistan announced that it will allocate 2,000MW to power crypto mining and data centres, in a move to attract foreign investment. The initiative is driven by the Pakistan Crypto Council and supported by the Ministry of Finance.

Dr Irfan confirmed that the government is still in talks to redefine its power subsidiary plan after the IMF has rejected the proposal. The committee further discussed technological solutions aimed at combating electricity theft. They also discussed the government’s recent agreement with scheduled banks to reduce the circular debt stock. Senator Shibli Faraz criticised that banks were “forced at gunpoint” to offer the loans.

The committee has directed the Power Division to submit comprehensive answers to various issues at the next meeting.

This rejection by the IMF highlights the challenges Pakistan faces in balancing its energy needs with its ambitions in the crypto sector. The IMF's concerns about the strain on the power sector and potential market distortions underscore the need for a more sustainable and consultative approach to energy policy.

Pakistan's plan to allocate 2,000MW for crypto mining and data centres was aimed at attracting foreign investment, but the IMF's rejection indicates that the government needs to address the legal and infrastructural challenges before proceeding. The ongoing discussions with international institutions suggest that Pakistan is committed to refining its energy plan to align with global standards and recommendations.

The rejection of Pakistan’s energy plan for Bitcoin mining by the IMF has significant implications for the country’s crypto ambitions. It underscores the need for a balanced approach that considers both the potential benefits and the challenges of integrating crypto mining into the national energy grid.