Main Points:
- IMF Rejects Power Subsidy Plan: The IMF has blocked Pakistan’s proposal to subsidize electricity for Bitcoin mining, warning of market distortions and economic imbalance.
- Origins of the 2,000 MW Allocation: In May 2024, the government set aside 2,000 MW of surplus power for crypto mining and AI data centers as part of its digital transformation strategy.
- Potential Economic and Energy Impacts: Subsidized rates of ₨ 22–23/kWh (≈ $0.08) per kWh could have absorbed surplus capacity but risked undercutting market prices and worsening sector fragility.
- International Support and Criticism: While figures like Michael Saylor have praised Pakistan’s vision, the IMF and other partners remain cautious about sector-specific concessions.
- Path Forward: World Bank Review and Revisions: The scheme is under review by the World Bank and other institutions, with the government revising its approach based on feedback.
- Strategic Bitcoin Reserve and DeFi Yields: Pakistan aims to build a national Bitcoin reserve and tap decentralized finance protocols for yield to expand its holdings.
IMF Rejects Power Subsidy Plan
In early July 2025, reports confirmed that the International Monetary Fund (IMF) formally rejected Pakistan’s proposal to offer subsidized electricity to energy-intensive industries, including Bitcoin miners. According to Secretary of Power Fakhre Alam Irfan, the IMF warned that fixed, below-market tariffs could distort Pakistan’s delicate power sector, exacerbate existing inefficiencies, and create economic imbalances reminiscent of past tax breaks that failed to deliver sustainable growth. The rejection underscores the IMF’s commitment to market-based pricing and its concern that subsidies for a niche sector could undermine broader fiscal and regulatory stability.
Origins of the 2,000 MW Allocation
The idea of harnessing Pakistan’s surplus electricity for high-tech industries dates back to May 2024, when the government—led by the Pakistan Crypto Council and the Ministry of Finance—earmarked 2,000 MW of underutilized power for Bitcoin mining and artificial intelligence data centers. Finance Minister Muhammad Aurangzeb announced duty exemptions for mining equipment and tax incentives for AI centers in an effort to attract foreign capital and generate high-tech employment. Bilal Bin Saqib, head of the Crypto Council, first proposed the plan at the council’s inaugural meeting in March, attended by senior legislators, the governor of the State Bank, and other key regulators. The initiative represented an ambitious step toward digital infrastructure development and foreign investment in Pakistan.
Potential Economic and Energy Impacts
Under the Power Division’s November 2024 proposal, industrial users in sectors like copper refining, data centers, and crypto mining would pay a marginal-cost tariff of ₨ 22–23 per kilowatt-hour, roughly $0.08 per kWh. Compared to the average industrial tariff of about $0.10 per kWh and residential rates near $0.12 per kWh (Figure 1), this subsidy could have spurred significant demand, helping to absorb surplus generation capacity and reduce waste. However, critics argued that introducing a preferential rate for a single industry would undermine price signals, discourage efficiency, and saddle other sectors or taxpayers with hidden costs.
International Support and Criticism
Despite the IMF’s reservations, Pakistan’s crypto strategy has garnered international endorsements. Michael Saylor, Executive Chairman of MicroStrategy, praised the Crypto Council’s forward-looking policies and emphasized Bitcoin’s role as a national store of value, offering to advise on strategic asset planning. Meanwhile, financial and geopolitical observers note that Pakistan’s push for digital assets and rare earth exports is part of a broader effort to diversify its economy and strengthen ties—particularly with the United States, a key export market. The Financial Times reports that Pakistan is actively courting U.S. partners to avoid potential trade tariffs and secure investments in both crypto infrastructure and mineral resources.
Path Forward: World Bank Review and Revisions
Irfan stressed that the IMF’s rejection does not signal the plan’s demise; instead, it is under review by the World Bank and other international partners. The government is using their feedback to refine the proposal, possibly by redesigning tariffs to include sunset clauses or tiered pricing that transitions back to market rates after a limited period. One option under consideration is a three-month relief window—half the initially proposed six-month subsidy—allowing a more gradual adjustment and reducing systemic risk. These revisions aim to strike a balance between promoting digital investment and maintaining fiscal responsibility.
Strategic Bitcoin Reserve and DeFi Yields
In parallel with mining ambitions, Pakistan has unveiled plans to establish a national Bitcoin reserve, a concept announced at the Bitcoin 2025 conference. Bilal Bin Saqib cited discussions with Michael Saylor as bolstering his confidence in using Bitcoin as a hedge against currency volatility. Additionally, Pakistan intends to deploy its holdings in decentralized finance (DeFi) protocols to generate yield, further increasing its BTC stash through interest-bearing platforms. This dual approach—combining strategic reserves with yield farming—could create a sustainable, self-replenishing fund to support digital infrastructure and provide a buffer in economic downturns.
Summary
Pakistan’s cryptocurrency policy includes many ambitious elements, such as using surplus electricity for mining, building a national Bitcoin reserve, and utilizing DeFi yields, but as the IMF’s refusal to grant electricity subsidies shows, effective implementation requires harmony with market principles. Restructuring is currently underway through discussions with the World Bank and others, and a path is being explored to balance investment attraction and fiscal soundness by introducing appropriate subsidy periods and tiered pricing. While keeping an eye on future developments, the key will be whether these measures can effectively utilize Pakistan’s energy surplus and drive new revenue sources and the growth of the digital economy.
