Main Points:
- Pakistan and El Salvador sign a Letter of Intent to establish formal diplomatic relations centered on Bitcoin and blockchain cooperation.
- Pakistan plans a national Bitcoin reserve and allocates 2,000 MW of surplus electricity for mining and AI data centers.
- El Salvador holds over 6,240 BTC ($752 million), having steadily increased its reserves in 2025.
- Pakistan remains under a $7 billion IMF program through 2027 but pushes ahead with its crypto agenda.
- An estimated 20–40 million Pakistanis already hold or use digital assets despite regulatory uncertainties.
- Strategic collaboration could accelerate blockchain policy development, regulatory innovation, and economic diversification in both nations.
1. A Historic Letter of Intent
On July 17, 2025, Pakistani Minister of State for Crypto and Blockchain Bilal bin Saqib and El Salvador President Nayib Bukele met in San Salvador to sign a Letter of Intent (LOI) formalizing diplomatic ties anchored in Bitcoin cooperation. This LOI lays the groundwork for:
- Joint research and development on blockchain policy frameworks.
- Shared expertise in regulatory innovation and digital asset oversight.
- Exploration of strategic Bitcoin reserves and mining infrastructure.
2. Pakistan’s Ambitious Crypto Strategy
Despite being under a $7 billion IMF loan program running through 2027, Pakistan continues to champion its digital asset agenda. Key elements include:
- National Bitcoin Reserve: Plans to accumulate sovereign Bitcoin holdings, with no anticipated sell-off, mirroring El Salvador’s long-term commitment.
- Energy Allocation for Mining: Allocation of 2,000 megawatts of surplus electricity to Bitcoin mining and AI data centers as part of a broader digital transformation strategy.
- Regulatory Infrastructure: Establishment of the Pakistan Digital Asset Authority in May 2025 to oversee digital asset regulation and foster a secure environment for innovation.
These moves are designed to leverage untapped energy resources, create high‑tech employment, and attract foreign investment, even as critics warn of potential strains on power grids and macroeconomic risks.
3. El Salvador’s Steady Accumulation
Since adopting Bitcoin as legal tender in September 2021, El Salvador has quietly grown its holdings:
- January 1, 2025: 6,000 BTC (≈ $555.8 million at $92,595/BTC).
- April 15, 2025: 6,158 BTC, despite a 9.36% price decline year‑to‑date.
- Early July 2025: 6,228 BTC, boosted by an 8 BTC purchase in late June.
- July 17, 2025: 6,240 BTC (≈ $751.8 million at current prices).
Below is a visual representation of El Salvador’s Bitcoin reserves growth in 2025:
(Interactive table and chart display)
4. Grassroots Crypto Adoption
In Pakistan, regulatory uncertainty has not dampened enthusiasm: estimates suggest 20–40 million Pakistanis hold or use digital assets, driven by remittance needs and speculative interest. Meanwhile, in El Salvador, the government‑backed Chivo Wallet and incentives have widened Bitcoin use among citizens, though precise user counts vary.
5. Strategic Implications
This alliance carries several potential benefits:
- Policy Synergy: Collaborative drafting of blockchain regulations could serve as a model for emerging economies.
- Economic Diversification: By embracing digital assets, both nations seek alternatives to traditional industries–Pakistan to mitigate fiscal pressures, El Salvador to bolster tourism and foreign investment.
- Innovation Ecosystem: Joint initiatives in mining technology and blockchain R&D may spawn new startups and skills development programs.
However, risks remain: IMF approval remains critical for Pakistan’s energy reallocation, and both governments must manage volatility, cybersecurity threats, and public skepticism.
Conclusion
Pakistan and El Salvador’s groundbreaking Bitcoin‑centered diplomatic pact represents a pioneering form of “cryptodiplomacy.” By pooling regulatory expertise, mining capacity, and sovereign reserves, these nations aim to fast‑track blockchain adoption and economic innovation. Their success—or setbacks—will resonate globally, offering a real‑world test case for how states might harness digital assets to reconfigure trade, energy, and financial ecosystems.
