Key Takeaways:
- Bitcoin mining could help Pakistan burn its way somewhere with excess power.
- The project is expected to bring investment and enhance the digital economy of Pakistan.
- For Pakistan to succeed, regulatory clarity and a stable power supply are essential.
In a decisive step which could transform both its economic and energy landscape, Pakistan is eyeing an unprecedented step of utilizing its excess electricity to run Bitcoin mining farms. The council’s first meeting featured this initiative as a key talking point and highlighted a potential paradigm shift in the country’s stance towards digital assets. The establishment of the council itself is a significant step, considering the nation’s previous reluctance toward cryptocurrencies due to security and regulatory issues.
Use Surplus Power to Turn Liabilities into Assets in Pakistan
The central concept is straightforward: Pakistan frequently has excess electricity that it doesn’t use, resulting in financial losses. Bitcoin mining, a power-intensive process that is nonetheless highly productive, would thereby be able to consume this underutilized power. This can be a turning point in Pakistan.
Based on his vision, Bilal Bin Saqib, CEO of the PCC, presented this idea at the PCC meeting to turn Pakistan’s liabilities into assets, where this wasted energy could be converted into revenue. For context, Bitcoin mining worldwide devours a staggering amount of electricity every year — estimates abound, but numbers that registered in October had Bitcoin use exceeding 130 terawatt-hours (TWh), more than all the electricity consumed in nations like Argentina or the Netherlands. Pakistan could attract significant interest from miners, as electricity costs account for 60-70% of their total earnings.
Creating a Future-Ready Financial Ecosystem for Pakistan
Presiding over the first meeting of the PCC, Finance Minister Muhammad Aurangzeb stated that the council and this initiative have strategic importance for Pakistan’s digital transformation. He said this effort is integrated into a new digital story for the economy. Pakistan, he said, is dedicated to creating a transparent and “future-ready” financial ecosystem that attracts investment, empowers the youth, and makes Pakistan a leader in emerging technologies.
However, the minister added that there was a need to learn from global best practices, and devise business and revenue models within the local realities of Pakistan. He urged that since many stakeholders have been already working on multiple initiatives in Pakistan, such efforts should be supplemented rather than be started from scratch.
Regulatory Crossroads: Learning from Global Examples for Pakistan
PCC members stressed the importance of regulatory clarity/consumer protection, licensing regimes, and national blockchain policy for Pakistan. They also covered the importance of a phased rollout, pilot programs, and following international obligations.
There are plenty of examples around the world. China, which was a Bitcoin mining hotspot at the time, banned the industry in 2021 because of environmental challenges and power shortages. In contrast, El Salvador utilizes geothermal volcano energy to mine.
This indicates that different countries have taken varying approaches that reflect their individual energy resources and policy priorities. Iran, for example, provides subsidized electricity for mining but often shuts down during peak consumption times. Tehran and the provinces surrounding it were plagued with rolling blackouts for weeks last year. Some observers suspected there was a connection with cryptocurrency mining that contributed to the outages, the Associated Press reported.
It initially welcomed crypto miners but has since implemented higher electricity tariffs and taxes owing to mounting energy deficits. Pakistan can glean some useful insight from these different situations.
Pakistan’s Crypto Plans and Special Tariffs Introduction
The Power Division of Pakistan is holding discussions with various stakeholders in order to create attractive electricity tariffs for crypto mining and blockchain-based data centers specifically. The objective is to provide power at marginal rates, utilizing surplus capacity without subsidies. Foreign mining companies have now expressed interest in this method and want to take advantage of the Pakistan’s surplus power.
Pakistan needs a stable and predictable environment that is crucial for investment in the long-term energy-intensive crypto mining sector. An official joint statement from the PCC meeting noted the need for regulatory clarity in order to realize the full potential of the sector in Pakistan.
Related News: Pakistan Approaches Legalizing Cryptocurrency to Draw Worldwide Investors
A High-Stakes Gamble with Much to Gain for Pakistan
Pakistan’s strategy of utilizing excess power to mine Bitcoin is a high-stakes gamble. To succeed, this venture must tackle key challenges, including establishing a clear and supportive regulatory framework, ensuring a stable and reliable power supply, and adhering to international regulations.
If it succeeds in overcoming these challenges, however, Pakistan can turn its energy liabilities into assets, attract foreign investment of good quality and volume, and become a leader in the emerging digital economy. But any mistakes can mean a mismanagement of energy and a setback in energy policies for Pakistan. Pakistan’s crypto gamble could pay off, as the world will be watching.
