Pakistan's Crypto Mining Plans Halted by IMF Rejection of Subsidized Power

Pakistan's ambitious plan to leverage surplus electricity for cryptocurrency mining has encountered a significant obstacle. The International Monetary Fund (IMF) has reportedly rejected a proposal to provide subsidized power to energy-intensive industries, including Bitcoin miners. This decision comes as a setback to Pakistan's efforts to utilize its excess electricity, particularly during the winter months, for crypto mining operations.

Fakhre Alam Irfan, Pakistan’s Secretary of Power, informed the Senate committee on energy that the IMF expressed concerns about the potential market distortions and worsening issues in the country’s fragile power sector. The IMF's stance is based on the belief that such pricing schemes could disrupt the market balance, despite Pakistan's surplus electricity capacity.

The Power Division had proposed a marginal-cost tariff of 22–23 rupees per kilowatt-hour for industries such as copper smelting, data centers, and crypto mining. The aim was to boost electricity demand and absorb surplus capacity. However, the IMF's rejection has put these plans on hold, as all significant energy policies must be approved by the IMF.

The IMF's rejection is rooted in historical concerns about sector-specific tax breaks creating economic imbalances in Pakistan. Irfan noted that while 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.

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.

Saqib, a key figure in the initiative, first proposed the plan at the Crypto Council’s inaugural meeting in March. The meeting included lawmakers, the Bank of Pakistan’s governor, the chairman of Pakistan’s Securities and Exchange Commission, and the federal information technology secretary. Saqib's proposal was part of a broader strategy to leverage digital technologies for economic growth.

Saqib also announced plans for a national Bitcoin reserve during the Bitcoin 2025 conference. He revealed that discussions with Michael Saylor of Strategy reaffirmed his conviction in this move. Additionally, Saqib mentioned that the country intends to expand its Bitcoin holdings using yield generated through decentralized finance protocols.