Pakistan's Bitcoin Mining Plan Rejected by IMF Over Power Concerns

The International Monetary Fund (IMF) has rejected Pakistan’s proposal to allocate 2,000 megawatts of subsidized electricity for Bitcoin mining and AI data centers. The IMF cited concerns about the potential strain on Pakistan’s already fragile power infrastructure, the legal uncertainty surrounding crypto mining in the country, and the potential for market distortion. Officials warned that such targeted subsidies could lead to unfair market advantages and potentially destabilize electricity pricing.

The IMF expressed that diverting power for mining could disrupt the country’s energy balance and lead to wider tariff implications. The legal framework for cryptocurrency in Pakistan is still in development, raising additional red flags. The IMF has previously discouraged sector-specific concessions, arguing they could resemble harmful tax holidays that disrupt economic parity. Notably, a similar attempt in 2024 to offer electricity at marginal cost for six months did not result in any uptake.

Despite the IMF’s objections, Pakistan is still exploring ways to support its digital economy ambitions. Discussions are ongoing with global partners to find a revised model that aligns with economic and legal standards. The government is determined to use surplus electricity to power blockchain innovation and AI expansion while ensuring compliance with international guidelines.

Earlier in 2025, Pakistan announced plans to build a national Bitcoin reserve and develop regulatory infrastructure with support from global crypto leaders. The country aimed to become a regional hub for blockchain technology, allocating significant energy resources to support this vision. However, balancing these ambitions with infrastructure capacity and fiscal responsibility remains a key challenge.

Pakistan's Secretary of Power, Fakhre Alam Irfan, informed the Senate committee on energy that the IMF's rejection was based on the potential for pricing schemes to disrupt market balance. Irfan emphasized that all significant energy policies must be approved by the IMF, highlighting the fund's influence over Pakistan's economic decisions. The Power Division's November 2024 plan proposed a marginal-cost tariff of 22–23 Pakistani rupees (about $0.08) per kilowatt-hour for industries such as copper smelting, data centers, and crypto mining. Officials argued that this scheme would boost electricity demand and help absorb surplus capacity, particularly during the winter months when excess electricity is available. However, the IMF dismissed the plan, comparing it to sector-specific tax breaks that have historically created economic imbalances in Pakistan.

Despite the rejection, the proposal has not been entirely shelved. It is currently under review by the World Bank and other international partners. The government is working on refining the plan with input from these institutions. Irfan noted that the government remains committed to finding a solution that aligns with IMF guidelines while addressing Pakistan's energy challenges.

In May, Pakistan had earmarked 2,000 megawatts of surplus electricity for Bitcoin mining and AI centers as part of a digital transformation initiative. The initiative, led by the Pakistan Crypto Council and supported by the Ministry of Finance, aimed to attract investors through tax incentives for AI centers and duty exemptions for Bitcoin miners. The proposal to use the country's surplus energy for Bitcoin mining was first suggested by Saqib during the Crypto Council's inaugural meeting in March. The meeting included key stakeholders such as lawmakers, the Bank of Pakistan’s governor, the chairman of Pakistan’s Securities and Exchange Commission, and the federal information technology secretary.

Saqib, who proposed the use of surplus energy for Bitcoin mining, also announced plans for a national Bitcoin reserve during the Bitcoin 2025 conference. He revealed that discussions with Strategy’s Michael Saylor had reinforced his conviction in this move. Saqib further stated that the country intends to expand its Bitcoin holdings using yield generated through decentralized finance protocols. This strategy aims to leverage the potential of Bitcoin mining to address Pakistan's energy surplus while also exploring new avenues for economic growth.