• The IMF blocked Pakistans subsidised crypto power plan, citing fears of market distortions and fiscal instability.
  • Circular debt exceeding US$4.5 billion (AU$6.84 billion) made further energy subsidies unacceptable to the Fund.
  • Ageing grid infrastructure suffers from high transmission losses and frequent outages, hindering mining viability.

Pakistans efforts to stimulate crypto mining through subsidised electricity have been blocked by the International Monetary Fund (IMF). In November 2024, the Power Division proposed a targeted pricing scheme at US$0.080.081 (AU$0.120.12) per kilowatt-hour for energy-intensive industries like Bitcoin mining and data centres. 

The IMF dismissed the proposal due to concerns it would distort market pricing and further destabilise the countrys fragile energy infrastructure, which is already grappling with circular debt exceeding US$4.5 billion (AU$6.84 billion).

Citing parallels with previous sector-specific tax breaks, the IMF refused to back the proposal. Power Secretary Dr Fakhray Alam Irfan told the Senate the plan is still being reviewed by the World Bank and other key institutions.

The move follows a prior rejection in September 2024, when the IMF only approved a shorter three-month industrial tariff scheme, citing similar concerns. Officials hoped that leveraging surplus electricity, particularly during winter, would attract crypto-related investments and ease capacity payments on idle generation resources.

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Crypto mining in Pakistan remains economically unfeasible, largely due to steep power costs. With industrial electricity rates sitting at approximately US$0.22 (AU$0.33) per kilowatt-hour, the expense of mining a single Bitcoin would amount to roughly US$132,000 (AU$200,692) which far exceeds its current market value.

The physical infrastructure also poses barriers. Pakistans ageing power grid is prone to outages, suffers from inefficient transmission, and lacks the reliability needed for round-the-clock mining operations.

Despite these setbacks, the government has continued its pro-crypto trajectory. It recently appointed Bilal Bin Saqib as a blockchain advisor to the prime minister and announced the creation of a national Bitcoin reserve. These steps align with earlier efforts to establish the Pakistan Crypto Council and attract investment through regulatory and fiscal reforms.

Still, the IMFs refusal signals that global financiers remain wary of Pakistans sector-specific subsidies, forcing the country to reconsider its digital expansion strategy without undermining macroeconomic goals.

Related: El Salvador Defies IMF Deal, Quietly Keeps Buying Bitcoin

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