- IMF Rejects Pakistan’s Crypto Power Subsidy Plan Over Energy Market and Fiscal Stability Concerns
- Pakistan’s 2,000 MW crypto mining energy plan is currently under review by the World Bank and other institutions.
- Pakistan’s Bitcoin reserve strategy faces uncertainty after the IMF blocked the subsidised electricity plan.
The International Monetary Fund (IMF) has officially dismissed Pakistan’s initiative to provide subsidised electricity for cryptocurrency mining. The ruling is a step backward in Pakistan’s wider strategy to develop digital asset infrastructure, such as a state-backed Bitcoin reserve and industrial-scale data centers.
According to a local media report, during a Senate Standing Committee on Power meeting, Secretary Power Dr. Fakhray Alam Irfan stated that the IMF had rejected the subsidy plan. The proposal targeted surplus electricity in winter months to be passed to industries that consume high energy, like crypto mining industries and artificial intelligence data centres. The IMF, however, expressed its concerns about possible market distortions and long-term effects on the country’s power industry.
IMF Raises Alarm on The Imbalance in the Markets
The plan proposed by Pakistan implied an electricity consumption of PKR 22 to 23 (approximately $0.08) per kilowatt per hour of crypto mining. The government believed that this would eliminate idle capacity, enhance electricity utilisation, and encourage investment. In spite of these assertions, the IMF raised concerns about an imbalance in the economy, citing that the plan parallels sector-based tax holidays, which have resulted in structural inefficiencies in the past.
The IMF’s move follows Pakistan’s proposals in the past months. At the time, a six-month discounted power package was turned down, and the funds that the IMF approved were for just three months. An updated version, which was proposed in November and aimed at crypto miners and AI companies, was also rejected.
At present, the country’s power sector has a circular debt of more than one trillion and seventy-five rupees (Rs 1.275 trillion) ($4.5 billion). The IMF cautioned that more subsidies, although targeted, may worsen this by decreasing the cost recovery in the other sectors and interfering with the price mechanism.
Also Read: Pakistan Boldly Partners with Michael Saylor to Launch National Bitcoin Reserve Strategy
IMF Pushback Challenges Pakistan’s Bitcoin Infrastructure Plans
Furthermore, the rejection raises doubts about the country’s intentions in the world of digital assets. Notably, the government recently revealed plans to dedicate 2,000 megawatts of excess electricity to Bitcoin mining and data centers as part of its nationwide infrastructure strategy. The goal of this plan, which officials hope will attract investment, generate employment, and position Pakistan as a regional digital hub, is expected to attract more investment.
The Pakistan Crypto Council and Pakistan Digital Assets Authority are driving such initiatives. Previously, Binance CEO Changpeng Zhao was made a strategic advisor, and Bilal Bin Saqib was the special assistant to the Prime Minister on blockchain.
Nonetheless, the IMF raised some concerns that the country did not consult before initiating these. The Fund also issued a caution that the energy allocation was likely to affect power supplies to other sectors and create fiscal risks unless well handled.
Discussions between the World Bank and other development partners are also continuing as an attempt to reach a balanced solution, Dr. Irfan said.
Also Read: Pakistan Eyes Crypto Mining to Transform Surplus Energy into Economic Growth
