Government’s Power Allocation Plan Faces Resistance

The government’s proposal to allocate 2,000 megawatts of surplus electricity to Bitcoin mining and artificial intelligence (AI) data centers has encountered significant opposition. Industrialists, merchants, and farmers argue that this power should instead be channeled to productive sectors to stimulate job creation and boost economic progress.

Sardar Usman Ghani, the Central Chairman of the Pakistan Hardware Merchants Association, voiced considerable concerns regarding the decision. He stated that providing inexpensive electricity to a “non-productive, speculative industry” is indefensible while industry, agriculture, and labor-intensive sectors are grappling with energy shortages.

Ghani told reporters, “It is alarming that the government intends to divert excess electricity to speculative ventures like Bitcoin mining rather than supporting productive industries.”

“This choice will neither generate employment nor foster tangible economic expansion. It will merely favor a select group at the expense of industries, traders, farmers, and laborers,” he elaborated.

The controversy stems from purported discussions between the government and Bitcoin miners, as well as AI companies, concerning the provision of electricity at reduced rates to capitalize on excess power generation capacity.

Critics, however, argue that Pakistan’s ongoing energy deficits render such an allocation imprudent, particularly when industrial and agricultural sectors experience frequent power disruptions.

Industry leaders and economists have questioned the financial rationale behind this decision, emphasizing the speculative nature of cryptocurrency markets.

Bitcoin mining consumes substantial power, and given that electricity expenses constitute a significant portion of operational costs, critics caution that the government could sustain considerable losses if cryptocurrency values decline.

Furthermore, the lack of transparency in tariff determination and the absence of a comprehensive regulatory framework for cryptocurrencies have amplified concerns.

The International Monetary Fund (IMF) has also sought clarifications from Pakistani officials, requesting details on electricity tariffs and the legal framework governing crypto mining. Virtual discussions between Pakistani officials and the IMF are anticipated soon to address these concerns.

Usman Ghani noted that the industrial sector in Pakistan is known for unreliable power supply, and dedicating 2,000 MW to Bitcoin mining could be detrimental.

Business leaders maintain that prioritizing speculative activities over manufacturing, agriculture, and small businesses impedes the allocation of resources, potentially hindering growth in sectors that generate employment opportunities.