Pakistan Bitcoin Mining Plan Faces IMF Rejection Over Energy Subsidies
Pakistan's ambitious plan to allocate surplus electricity for Bitcoin mining faced a major setback this week. The International Monetary Fund rejected the government's proposal to offer subsidized power rates to energy-intensive industries, including cryptocurrency miners. According to Cointelegraph, Pakistan's Secretary of Power Fakhre Alam Irfan informed the Senate committee on energy about the IMF's decision.
The Power Division had proposed a marginal-cost tariff of 22-23 Pakistani rupees per kilowatt-hour for industries like copper smelting, data centers, and crypto mining. CoinDesk reports that the government planned to allocate 2,000 megawatts from its 7,000 MW electricity surplus to crypto mining at rates equivalent to $0.08 per kWh. The IMF dismissed the plan, comparing it to sector-specific tax breaks that historically created economic imbalances in Pakistan.
Economic Impact on Pakistan's Digital Strategy
The rejection represents a major obstacle for Pakistan's broader digital transformation initiative. The government had earmarked the 2,000 megawatts in May 2025 as part of efforts to attract foreign investment and create high-tech employment opportunities. Finance Minister Muhammad Aurangzeb previously announced tax incentives for AI centers and duty exemptions for Bitcoin miners to boost the initiative.
Pakistan generates significant surplus electricity, particularly during winter months when demand drops to 12,000 MW. The country pays 2.1 trillion Pakistani rupees annually in capacity payments to idle power plants. Officials argued that channeling this excess capacity toward Bitcoin mining could generate approximately $500 million yearly while addressing the financial burden of unused electrical infrastructure.
The IMF expressed concerns that subsidized electricity rates could distort energy markets and worsen existing issues in Pakistan's fragile power sector. Pakistan requires IMF approval for all significant energy policies under its current bailout agreement. Officials confirmed that discussions with international institutions continue as the government works to refine the proposal according to global standards.
Global Mining Landscape and Regulatory Challenges
The IMF's position reflects broader international concerns about cryptocurrency mining's environmental impact and resource allocation. Other developing nations have pursued similar strategies with mixed results. As we previously reported, Argentina's subsidized electricity rates enabled profitable Bitcoin mining operations, with miners benefiting from ultra-low electricity costs averaging 2-3% of monthly income.
Pakistan's situation mirrors global tensions between cryptocurrency adoption and energy policy oversight. The country's crypto strategy includes plans for a national Bitcoin reserve and the establishment of the Pakistan Digital Asset Authority to regulate exchanges and wallets. Binance co-founder Changpeng Zhao serves as an adviser to the Pakistan Crypto Council, demonstrating international interest in the initiative.
The IMF's stance aligns with its broader cryptocurrency policy framework. The organization previously published research suggesting that crypto mining could generate 0.7% of global carbon dioxide emissions by 2027. Traditional financial institutions remain cautious about energy subsidies for mining operations, particularly in countries with existing power sector challenges.
Pakistan's experience serves as a test case for other emerging economies considering similar approaches. The outcome of ongoing negotiations between Pakistani officials and international financial institutions may influence how other nations structure their cryptocurrency mining policies. The government maintains that the proposal remains under review rather than permanently shelved, suggesting potential modifications to address IMF concerns while preserving the initiative's core objectives.
