The International Monetary Fund (IMF) has blocked Pakistan’s ambitious plan to subsidize electricity for Bitcoin mining. The decision, announced by the country’s Secretary of Power, cited concerns over legal risks, market disruptions, and strain on Pakistan’s fragile power grid. The country aims to allocate 2,000 megawatts of surplus electricity to fuel crypto mining and AI data centers.
IMF Squashes Crypto Mining Subsidy Plan
The IMF rejected Pakistan’s proposal to offer subsidized electricity rates for crypto mining, citing significant economic and legal issues. The plan, initially pitched to manage surplus power, aimed to provide electricity at $0.09 per kWh. The IMF warned that such subsidies could distort markets and strain the country’s already burdened power system.
This rejection follows a pattern, as the IMF previously blocked similar subsidies in 2024 for Pakistan’s textile sector, citing fiscal instability. Dr. Fakhray Alam Irfan, Secretary of Power, noted ongoing talks with global lenders to refine the plan. The country’s energy sector struggles with chronic shortages, high tariffs, and inefficient coal plants, which complicate the subsidy proposal.
Pakistan’s Crypto Plan Faces Hurdles
Pakistan’s plan to allocate 2,000 megawatts for Bitcoin mining and AI data centers aims to transform surplus energy into revenue. Led by the Pakistan Crypto Council, the initiative sought to attract global investors with tax breaks and cheap power. The government hopes to create high-tech jobs and position the country as a digital hub.
However, the plan faces significant challenges, including an unstable grid and high commercial electricity rates. The IMF’s rejection of subsidized rates at $0.09/kWh adds pressure, as global miners may find the costs uncompetitive. Reliance on aging coal plants raises sustainability concerns, while regulatory uncertainties further complicate the initiative.
Additionally, the country’s lack of a formal crypto framework creates risks for investors, as seen in the IMF’s scrutiny. In 2024, Indonesia faced similar IMF pushback over subsidized power for crypto projects, citing market distortions. The government is now engaging with the World Bank to explore alternatives, but delays are likely.
Meanwhile, Pakistan has publicized its desire to welcome crypto-related ventures. Just recently, the nation’s Crypto Council (PCC) signed a landmark Memorandum of Understanding (MOU) with World Liberty Financial (WLFI), a Trump family crypto venture. Additionally, the nation recently released a new regulatory framework.
