IMF pushes back on Pakistan’s subsidized electricity proposal for crypto mining

The IMF has declined Pakistan’s bid for subsidised electricity for crypto mining, despite earlier plans to allocate 2,000 megawatts of surplus power to the sector.

In a session with the Senate Standing Committee on Power, chaired by Senator Mohsin Aziz, Secretary of Power Dr. Fakhray Alam Irfan outlined the government’s recent efforts to negotiate subsidised electricity tariffs with the International Monetary Fund, as reported by Pakistan outlet Profit.

Dr. Irfan explained that the proposal aimed to offer reduced electricity rates to energy-intensive sectors, particularly crypto mining and certain industrial operations, in hopes of spurring economic activity and utilising surplus power. However, the IMF rejected the idea, arguing that such subsidies could disrupt the energy market and add further strain to the power sector’s already fragile finances.

This follows Pakistan’s earlier announcement of plans to dedicate 2,000 megawatts of surplus electricity specifically for Bitcoin (BTC) mining and AI data centers under a national digital infrastructure initiative. The project aimed to attract foreign investment, create jobs in emerging technologies, and put idle generation capacity to productive use.

Before this latest proposal, the government had floated other measures that also failed to gain the IMF’s approval. In September last year, officials suggested a six-month electricity tariff at marginal cost, pegged at Rs 23 per kilowatt-hour, to support crypto mining and other high-consumption industries. The IMF, however, agreed only to a shorter, three-month plan, citing worries over the potential disruption such incentives might create in the market’s equilibrium.

Later in November, the government tried again with a targeted subsidy specifically crafted to encourage surplus electricity consumption, but the IMF dismissed that as well, likening it to sector-specific tax holidays that risk economic imbalance.

Despite these setbacks, Dr. Irfan assured the committee that discussions with the IMF and other international bodies remain ongoing in search of a workable solution.