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

Pakistan's ambitious plan to leverage its 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.

According to Pakistan’s Secretary of Power Fakhre Alam Irfan, the IMF expressed concerns that such subsidies could distort the energy market and exacerbate existing issues in the country's fragile power sector. Irfan highlighted that all major energy policies must be approved by the IMF, underscoring the fund's influence over Pakistan's economic decisions.

The Power Division had 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. The plan aimed to boost electricity demand and help absorb surplus capacity. However, the IMF's rejection of the proposal has put these plans on hold, as the government now seeks to refine the plan with input from the World Bank and other international partners.

The IMF's stance is based on historical evidence that sector-specific tax breaks have created economic imbalances in Pakistan. This concern has led the IMF to dismiss the proposal, comparing it to previous measures that have had adverse effects on the economy. Despite this setback, the proposal has not been entirely shelved and remains under review by international partners.

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. This plan was first proposed by Saqib during the Crypto Council’s inaugural meeting, which included key stakeholders such as lawmakers, the Bank of Pakistan’s governor, and the chairman of Pakistan’s Securities and Exchange Commission.

Saqib, who has been a vocal proponent of using Pakistan's surplus energy for Bitcoin mining, announced plans for a national Bitcoin reserve during the Bitcoin 2025 conference. He revealed that discussions with Strategy’s Michael Saylor had reinforced his belief in this move. Additionally, Saqib has expressed intentions to expand Pakistan's Bitcoin holdings using yield generated through decentralized finance protocols, further emphasizing the country's commitment to leveraging cryptocurrency for economic growth.