IMF Rejects Cheap Power Plan for Crypto in Pakistan

The International Monetary Fund (IMF) has officially rejected Pakistan’s proposal to offer subsidized electricity rates to cryptocurrency miners, AI data centers, and heavy industries. The plan, initially aimed at utilizing surplus power and attracting investment, is now under intense scrutiny and review, with backing from other lenders like the World Bank questioned.

• Strong opposition: IMF says no targeted subsidies for crypto mining or data centers under its financial program 

• Procedure issue: IMF emphasizes that such policies must be mutually agreed and policy-aligned with the loan conditions

• Pending review: World Bank and other lenders are also reviewing the proposal’s compliance with fiscal discipline goals.

• Business backlash: Hardware Merchants Association and others protest preferential power access, calling it non-productive and speculative 

• Agriculture & industry concerns: Leaders warn that cheap power for crypto farms could weaken essential sectors amid existing energy shortages

Energy inequality: Rural users face outages while crypto farms might enjoy stable, cheap power 

Financial risk: Crypto mining is volatile—losses may negate benefits and shift risk onto power consumers

Grid strain: Diverting 2,000 MW to high-demand operations risks increased blackouts, as seen in Iran and Kazakhstan 

Regulatory gap: Crypto remains largely unregulated in Pakistan; subsidies without a legal structure raise red flags

• El Salvador & Bhutan: Achieved modest success with renewable power and sovereign crypto reserves 

• Iceland: Profited by leveraging geothermal/hydro for mining at low cost 

• Iran & Kazakhstan: Faced energy crises after granting large-scale power to miners

• Power Secretary Fakhray Alam Irfan: Confirmed IMF’s rejection, noting the proposal remains under review with other lenders

• Senate scrutiny: Lawmakers questioned the plan and sought clarity on implications for circular debt and load-shedding

• Virtual IMF consultations: Pakistan’s economic team to discuss the proposal’s compliance 

• Legal clarity needed: Crypto remains unregulated—must establish framework before any subsidies are viable

• Energy dispatch review: Power Ministry to assess grid capacity and oversight mechanisms

• Surplus usage delayed: Idle power can’t be leveraged yet for crypto/AI expansion

• Fiscal discipline supported: IMF’s stance aligns with broader economic reforms and subsidy cuts

• Sectoral impact: Heavy industries and agriculture remain vulnerable to power allocation shifts

• Investor uncertainty: Crypto and AI investors remain on hold until tariffs and regulations are clarified

Pakistan’s ambitious project to use 2,000 MW of cheap electricity for crypto and AI infrastructure has hit a major roadblock with the IMF's rejection. Opposed by industrial groups and viewed as a potential subsidy misstep, the plan now awaits regulatory reform, legal validation, and aligned consultations with lenders. Until these critical steps are taken, the initiative remains on hold, with broader energy and economic implications in play.