The International Monetary Fund (IMF) has formally opposed Pakistan’s proposal to offer discounted electricity rates to Bitcoin mining operations and other energy-intensive industries. The move has raised concerns about potential market distortions, added strain on the national power grid, and broader financial risks.
Although the proposal has not been finalized, the government had been actively seeking guidance from international organizations. Local reports confirm that the plan is still under review.
IMF’s Key Objections to Pakistan’s Subsidy Plan
The IMF expressed strong reservations regarding the potential consequences of subsidized electricity for cryptocurrency mining. Dr. Irfan, a representative involved in the discussions, informed the relevant committee that the international body is concerned about possible market disruption and inefficiencies.
This disapproval follows earlier warnings from the IMF last month, when the fund questioned the legality of cryptocurrency mining in Pakistan and highlighted existing legal and electricity usage challenges.
The global financial institution outlined multiple areas of concern, including:
- The ambiguous legal status of crypto mining within Pakistan.
- Additional stress on an already overburdened national electricity system.
- Misallocation of resources and the subsequent impact on electricity pricing for other consumers.
It was also noted that Pakistani authorities did not consult the IMF before announcing the plan in May, which proposed allocating 2,000 megawatts to support cryptocurrency mining and data centers—a strategy led by the Pakistan Crypto Committee (PCC) with support from the Ministry of Finance.
Despite the IMF’s initial rejection, Dr. Irfan indicated that the government continues to refine its subsidy proposal in consultation with regulators.
Committee discussions also covered technical measures to combat electricity theft and recent agreements with commercial banks aimed at reducing circular debt. Senator Shibli Faraz noted that banks felt “forced at gunpoint” to participate in these debt agreements. The power division has been asked to provide detailed responses on these issues in future meetings.
Background on Pakistan’s Power Allocation Strategy
Earlier this year, Bilal Bin Saqib, CEO of the Pakistan Crypto Committee (PCC), announced the country’s intention to direct surplus electricity toward Bitcoin mining and AI data centers. He confirmed that discussions were already underway with several mining companies.
Pakistan’s energy sector currently faces dual challenges: rising electricity prices and excess generation capacity. The rapid growth of solar energy has further complicated the landscape, as more consumers turn to alternatives to offset high energy costs.
Saqib emphasized that the placement of new mining centers would be determined based on regional power surpluses.
Notably, Binance founder Changpeng Zhao (CZ) was reported to be serving as a strategic advisor to the PCC. CZ, who recently began a four-month prison sentence after pleading guilty to violating U.S. anti-money laundering laws, was expected to advise on blockchain infrastructure, regulatory frameworks, and national digital asset projects.
Growing Crypto Adoption in Pakistan
Saqib has pointed to strong cryptocurrency adoption within Pakistan, estimating the number of users between 15 and 20 million. The country is also one of the world’s top three freelancing economies and has a rapidly expanding fintech sector.
Despite the lack of an official regulatory framework, Pakistan ranks among the top ten countries globally for cryptocurrency adoption.
The government’ broader strategy includes using surplus electricity for economically productive purposes, such as powering mining and AI data facilities. Officials believe this can attract foreign investment, create jobs, and generate revenue.
This initial allocation of 2,000 megawatts is the first phase of a larger plan to develop digital infrastructure over time.
Frequently Asked Questions
Why did the IMF reject Pakistan’s electricity subsidy plan for Bitcoin mining?
The IMF raised concerns about market distortion, added pressure on the national power grid, and potential fiscal risks. It also questioned the legality of crypto mining in Pakistan and noted a lack of prior consultation.
What is Pakistan’s goal in offering discounted electricity to miners?
The government aims to use surplus electricity for Bitcoin mining and AI data centers to attract foreign investment, generate revenue, and create jobs. 👉 Explore more strategies for economic growth
How many cryptocurrency users are there in Pakistan?
According to the Pakistan Crypto Committee, the country has between 15 and 20 million crypto users, placing it among the top ten nations globally for cryptocurrency adoption.
Is cryptocurrency mining legal in Pakistan?
The legal status of crypto mining remains unclear. The IMF specifically cited this ambiguity as one of its concerns regarding the proposed electricity subsidies.
Will Pakistan continue to pursue its Bitcoin mining plan?
Although the IMF has rejected the proposal, the Pakistani government is still in discussions with regulators and may submit a revised plan in the future.
What role does Binance’s founder play in Pakistan’s crypto plans?
Changpeng Zhao was reportedly a strategic advisor to the Pakistan Crypto Committee, offering guidance on blockchain infrastructure and regulatory frameworks—though his current involvement is uncertain following his legal proceedings.