Pakistan just earmarked 2,000 megawatts of electricity for bitcoin mining and artificial intelligence data centers, according to Reuters. While it's a bold and controversial move that could reshape the country's tech sector and economy, it's raising questions about energy use and environmental impact.
What is Pakistan's bitcoin and AI power plan?
This plan involves Pakistan allocating 2,000 MW by utilizing surplus energy.
According to a statement by the nation's finance division, the announcement — which was made at the Bitcoin 2025 conference with Vice President JD Vance and Eric Trump in attendance — marks the "first phase of a broader, multistage digital infrastructure rollout" intended to transform Pakistan's digital efforts.
The plan is also part of a broader strategy that aims to monetize the country's excess energy, create new jobs, repurpose some of its underutilized coal plants, and generate additional income for the government.
That said, according to CoinGeek's Jacob Rozen, the effort "has drawn sharp scrutiny from the International Monetary Fund (IMF), which is questioning its legality, sustainability, and impact on Pakistan's strained energy grid amid ongoing financial negotiations." Per Rozen, Pakistan has seen price increases of 55% on electricity since 2021 that have led to "social unrest" and "the move risks exacerbating public discontent ... where outages often exceed 12 hours daily."
Why Pakistan's energy strategy matters now
Pakistan sees AI and crypto mining as potential growth engines for its struggling economy. Over the last 50 years, it has been considered one of the poorest economies in South Asia.
Several factors, including population expansion, high inflation rates, trade deficits, and debt, are among the drivers of this economic struggle. As Pakistan seeks to legalize cryptocurrency, the initiative aims to attract foreign investment and establish itself as a regional hub for emerging technologies.
However, bitcoin mining is an energy-intensive process, often criticized for its environmental toll.
"BTC has grown as a financial instrument, yet concerns have risen due to its consensus mechanism, which requires miners to consume large amounts of electricity. As this energy is largely derived from oil, gas, or coal, it increases pollution and causes significant environmental damage," according to an analysis published in the Sustainable Development journal.
A recent University of Cambridge study projected that 52.4% of energy used for bitcoin mining now comes from more sustainable sources, with 42.6% renewable and 9.8% nuclear, which is proof of good steps in the right direction to dispute the phrasing of "largely" in such estimations. Still, the concerns apply in particular whenever the mining is done with grid power, though even then, many operations have moved toward using grid power only during times of excess energy supply and shutting down during high-demand periods.
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Definitely 💰 While Pakistan's plan includes utilizing clean energy sources like solar and hydropower and is intended to focus on surplus energy, the sheer scale — 2,000 MW is enough to power thousands of homes — raises questions about whether the benefits outweigh the costs.
The CoinGeek analysis provided a positive outlook as well, ending on a note that speculated about what Pakistan's plan may portend for other countries in the future.
"Pakistan's young, tech-savvy population, with over 40 million digital asset wallets and an average age of 23, offers a strong foundation for digital innovation," Rozen wrote. "Low labor costs and untapped renewable energy potential (currently only 7% of the power mix) could make Pakistan a future mining hub if infrastructure improves.
"... Success could inspire other developing nations to embrace crypto mining, while failure could reinforce the IMF's cautionary stance on digital assets. For now, Pakistan's bold vision hangs in the balance, caught between innovation and economic reality."
How bitcoin mining and AI strain energy systems
If executed properly, this rollout in Pakistan could allow for the bitcoin mining to be turned off when the power generation cannot keep up, but officials will need to establish clear guardrails to make sure the plan works as intended and does not further exacerbate electricity costs in the short term.
"Due to its high demand for electricity, proof-of-work cryptocurrency mining has not been welcomed in every corner of the world. Miners seek cheap energy to maximize their profits, but their energy-intensive activities typically drive electricity costs up for everyone," journalist and writer Judith Lewis Mernit wrote for Yale Environment 360.
What's more, even when bitcoin or crypto miners are using less expensive energy when grid demand is lower, they still draw some power from dirty energy sources. Many bitcoin mining operations have moved toward owning and operating their own renewable energy power sources, such as wind farms, and it will be important for this trend to continue to reduce bitcoin's draw on public energy grids. Still, Mernit said, this can take renewable sources out of the grid in the short term and force ordinary consumers to use more dirty energy, even if it may help to drive renewable growth in the long term.
As countries explore tech-driven growth, understanding the climate cost of digital infrastructure can help consumers make more informed choices about energy and the environment.
Editor's note: This article has been updated to provide context from a recent University of Cambridge study and CoinGeek analysis.
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