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The IMF has rejected Pakistan’s proposal to offer subsidised electricity for crypto mining.
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The proposal aims to use surplus power and boost cryptoactivity.
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Despite this setback, Pakistan continues its engagement with international bodies in order to explore a better framework.
The International Monetary Fund has rejected Pakistan’s plan to provide electricity tariffs at a subsidised rate for cryptocurrency mining operations. This was due to concerns that this would lead to economic imbalances in the country and cause distortions in its fragile energy market.
The proposal was aimed at increasing electricity consumption and encouraging industrial activity related to cryptography. The Power Division presented it in 2024, but it failed to gain traction among the global lender.
Fakhray Alam Irfan, Secretary of Power, briefed Senator Mohsin Aziz’s Senate Standing Committee on Power on the current discussions. Irfan said that the IMF rejected a subsidy structure on the grounds it could burden an already fragile energy sector, and undermine price transparency.
Related: IMF Warns Pakistan over Bitcoin Reserve Amid Legal and Energy Concerns
Timeline of Rejection
In its original submission to the Power Division in September 2024, it recommended a six month power tariff at marginal costs (Rs 23/kWh), for crypto miners. The IMF approved only a three-month version that was scaled back, citing the risks to the wider power market.
In November 2024, officials submitted a revised proposal to encourage the use surplus electricity in off-peak hours. The IMF also rejected this proposal, as it was viewed as similar to sector-specific tax holiday, which often introduces inefficiencies and distorts market competition.
Irfan confirmed, despite the pushbacks, that Pakistan is still in talks with international organizations to refine and possibly relaunch an acceptable plan.
Circular Debt Deal attracted Scrutiny
The Senate committee also discussed a recent agreement reached with scheduled banks in order to reduce the circular debt stock of the nation, which is Rs 1.275 trillion. Senator Shibli Faraz criticized the deal, claiming that financial institutions were pressured to comply and warned that consumers would be the ones who bear the brunt through future levies.
Irfan retorted that no new taxes had been introduced. The existing Debt Service Surcharge (DSS), of Rs 3.23/kWh, will be in place for the next 5 to 6 years, covering all financing obligations.
Irfan revealed that 58% of electricity consumers fall under the “protected category” and pay just Rs 10 per unit. The government is also investing in technology to combat electricity theft.
The Senate committee instructed the Power Division to present a detailed report in the next session on the impact of subsidies as well as anti-theft policies.
Pakistan’s Crypto Push Continues
The IMF’s refusal highlights the regulatory challenges that crypto mining in Pakistan faces, especially around its high energy requirements and questionable value to the economy over the long term.
While the government’s priority is to reduce electricity consumption, it will be difficult to balance this with fiscal discipline as well as international lender expectations.
Despite this, countries such as Pakistan continue to promote themselves as crypto-friendly. Michael Saylor, a Bitcoin advocate, met with Pakistan’s Finance minister in June to discuss integrating Bitcoins into national reserves and creating a regulatory framework.
RelatedPakistan’s Pro-Bitcoin Movement Gains Momentum With Support from “CZ”, and Now Michael Saylor
Saylor shared his insights on Bitcoin’s role as a sovereign currency. Binance’s Changpeng Zhao, as well as Zachary Witkoff and other U.S. investors, had previously backed Pakistan’s efforts in the crypto space. Zhao acted as a crypto adviser.
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