Pakistan's bold crypto mining gambit

Business Recorder

2 days ago

Pakistan's ambitious plan to allocate 2,000 megawatts (MW) of surplus electricity to Bitcoin mining and AI data centres is a daring leap into the digital economy.
Announced by the Finance Ministry on May 25, 2025, this initiative could signal Pakistan's arrival on the global crypto map – but it also raises profound questions about energy policy, economic priorities, and long-term sustainability.
As crypto markets rebound from past crashes and energy prices remain volatile, the proposal warrants both optimism and caution. It promises digital innovation and potential revenue streams, but without careful implementation, it could entrench risky economic dependencies and compromise more stable development opportunities.
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Understanding the scale and context
The 2,000MW allocation represents a significant portion of Pakistan's estimated 10,000 - 15,000MW surplus capacity, much of which results from expensive power purchase agreements (PPAs). These capacity charges, currently costing the government around $5.3 billion annually, could reach $9 billion if unused energy remains idle.
This surplus seems to be a paradox. Despite underutilised generation capacity, Pakistanis face frequent load shedding, sky-high electricity bills, and a fragile transmission network that loses approximately 16% of generated power through theft and inefficiencies.
So, while monetising idle electricity seems practical, committing 2,000MW to an energy-intensive, speculative sector like crypto mining could exacerbate structural energy challenges.
Economic potential
Setting up mining operations at this scale is no small feat. Based on current market estimates:
ASIC mining hardware (specialised Bitcoin mining machines) could cost around $400–500 million.
Additional investments in cooling, grid infrastructure, security, and data centre construction may require another $300–$400 million.
Operational profitability depends heavily on the price of Bitcoin, which has historically fluctuated between $15,000 and $70,000 in the last five years.
Potential annual revenue from a fully optimised 2,000MW facility could be around $1 billion under ideal conditions, but these figures are subject to extreme volatility, hardware depreciation, increasing mining difficulty, and rising global competition.
Strategic benefits
International investors have shown interest in partnering with Pakistani authorities, potentially bringing in foreign direct investment and technological expertise.
Monetising surplus power could reduce fiscal pressure from idle capacity payments.
Mining infrastructure could serve as a gateway for broader digital economy development, including data centres, AI labs, and blockchain platforms. However, job creation in crypto mining is limited. A mining facility typically employs 1–3 workers per MW, compared to 10–20 per MW in manufacturing or IT sectors.
Risks and Opportunity Costs
Volatility and obsolescence: Bitcoin's value is notoriously unstable. The 2022–2023 crypto crash wiped out billions in value and forced several mining firms to shutter operations. Committing public infrastructure to such a volatile asset class introduces high fiscal risk.
Grid Vulnerabilities: Pakistan's grid is already strained, placing 2,000MW of constant demand into the system could cause further instability unless major upgrades are made. Any future outages or demand shocks could cripple mining operations or disrupt supply to critical sectors.
Regulatory Uncertainty: While Pakistan has made progress by establishing the Pakistan Digital Assets Authority (PDAA) and engaging with the FATF, global cryptocurrency regulation is in flux. Past reversals by countries like China and Kazakhstan offer cautionary tales.
Alternative Investment Scenarios: If Pakistan is serious about leveraging surplus power, more stable, job-rich industries offer far greater long-term dividends.
Manufacturing and heavy industry: Aluminium smelting, steel production, and petrochemicals require high power inputs but create extensive employment and long-term exports. Similar investment in General Manufacturing, Defence industries, (POF, HIT, AWC etc), could also bring more sustainable and reliable economic growth. These sectors stimulate domestic supply chains, reduce import dependency, and have lower volatility than crypto markets.
IT and cloud infrastructure: Pakistan's IT sector already generates over $2 billion in annual exports and is growing at 15–20% per year. Investing in data centres, cloud computing, and software parks could multiply export earnings, build human capital, and support business process outsourcing (BPO) and AI startups.
Green hydrogen economy: With abundant sunlight and wind, Pakistan could become a regional green hydrogen hub. Using surplus electricity for electrolysis opens up future-ready export markets in Europe, the Gulf, and East Asia. This aligns with climate commitments and unlocks strategic geopolitical leverage.
A balanced way forward
Pakistan's crypto mining initiative, while visionary, should be framed as a pilot project rather than a wholesale policy pivot. Success will depend on:
• Transparent public-private partnerships with built-in risk-sharing • Robust regulatory oversight and energy allocation strategies • Parallel investments in more sustainable industries using surplus power
A multisector approach that includes crypto, but also prioritises manufacturing, IT, and clean energy, is essential to maximise economic diversification and safeguard against speculative risk.
Pakistan's 2,000MW crypto mining gambit holds real potential – but must be implemented carefully, transparently, and with eyes wide open. The right path may not lie in betting solely on Bitcoin, but in using this opportunity to leverage energy assets strategically across multiple high-impact sectors.
Rather than being the endgame, crypto mining should be viewed as one piece of a broader puzzle – one that balances digital innovation, economic stability, and long-term national interest.
For sustainable development, visionary ideas must walk hand-in-hand with measured, evidence-based execution. Pakistan's future should be powered not just by hash rates – but by smart, inclusive, and diversified growth.
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