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Recent media reports have highlighted the allocation of 2000 MW of power for Bitcoin (BTC) mining. In a country like Pakistan, where such developments are relatively uncommon, this marks a significant and noteworthy milestone.
However, amid the rapidly evolving global energy landscape, this initiative also presents a complex dilemma i.e., balancing the potential economic benefits of innovation with the challenges of managing the existing energy resources.
To fully grasp the situation, it is essential to understand how Bitcoin mining operates, including its key inputs and outputs, the valuation associated with the process, and the potential advantages it may bring to Pakistan.
“Bitcoin mining involves solving complex computational problems using specialized hardware (Application-Specific Integrated Circuits – ASICs), which requires significant energy consumption as an input. The output is the creation of new bitcoins as well as the validation of transactions on the blockchain for which the miners earn a transaction fee.”
The total computational power used to mine bitcoinand process transactions on the Bitcoin network is referred to as Hash rates. It increases when more miners or more powerful hardware are used. Bitcoin’s mining difficulty adjusts over time to ensure consistent block times (10 minutes), which may indirectly influence the required computational effort.
“The hash rate is directly proportional to the computational effort required to solve cryptographic puzzles in the Bitcoin network. Since this computational effort relies on continuous processing by specialized hardware, it is also directly proportional to energy consumption. In essence, a higher hash rate reflects increased computational intensity, which in turn demands greater electrical power input.”
Figure 1: The increase in Bitcoin Hash rate since 2018 (source: coinwarz.com)
Think of the Bitcoin network like a city bus system. Each bus represents a new block of Bitcoin transactions, and passengers are the transactions waiting to be confirmed. A bus arrives roughly every 10 minutes, picks up passengers based on available space, and drives off just like how new blocks are added to the blockchain.
But here’s the twist: Before a bus can leave, the driver has to solve a tricky puzzle, kind of like solving a brain-teaser under pressure. The first driver to solve it gets to leave with passengers and earns a reward (Bitcoins and transaction fees).
To solve these puzzles faster, drivers (miners) need powerful engines (hardwares, ASIC, GPUs, etc.), and those engines burn a lot of fuel (electricity). As more drivers join the race with faster, more energy-hungry machines, the whole system ends up using more and more energy.
Bitcoin mining hardware, like powerful bus engines in our analogy, consumes significant energy. High-performance ASIC miners (200–300 TH/s) use around 3,500 to 4,000 watts continuously, equating to 3.5–4 kWh per hour per device. As the network’s hash rate has surged to around 900 EH/s, global competition has intensified, driving both energy use and mining difficulty higher.
To estimate daily Bitcoin mining output and costs: a high-performance ASIC mining hardware (250–300 TeraHash/s puzzle solving rate) costs around USD 3,500–5,000. At the current network hash rate of 900 ExaHash/s, one such machine can mine about 0.00014 BTC per day. This translates to the following:
Assuming a 2, MW load (allocated by Government) for Bitcoin mining, roughly 350,000 number of ASIC machines (worth of USD 1.25-1.75 billion) could be deployed, potentially generating around 49 BTC per day.
At a Bitcoin price of USD 150,000, this translates to daily revenue of approximately USD 7.35 million. But the catch is that as the hash rate of Bitcoin starts to increase it will require more hardware to mine the same number of bitcoins on daily basis.
Hash rate growth projection (source: Gomining, May 1 2025)
However, the profitability of such an operation depends on several factors, including:
Energy price remains a critical factor in the viability of crypto mining. While Pakistan is often described as energy-surplus, the reality is more nuanced. During peak summer months (May to September), the gap between available generation capacity and peak demand ranges from 4,700 to 6,700 MW. With ongoing revenue-based load shedding of 2,000–3,000 MW, this margin shrinks to just 2,700–3,700 MW. Adding a continuous 2,000 MW crypto mining load could place significant stress on the generation system during these critical months.
Furthermore, the reported energy price for the 2,000 MW crypto mining allocation is around 5–6 cents/kWh. However, this may fall below the marginal cost of generation during summer peaks, when expensive, imported-fuel-based plants are dispatched. As a result, miners may be implicitly subsidised, with the cost burden effectively shifted to other consumers.
Given the concessional energy pricing offered to crypto mining, it is worth questioning whether this electricity could be more productively allocated to sectors such as textiles, manufacturing, or automotive; industries that generate greater value through job creation, exports, and foreign exchange inflows. In contrast, crypto mining is highly capital and energy intensive, offers minimal employment, and may depend on imported fossil fuels, thereby adding to the global GHG emissions.
Additionally, as more miners join the Bitcoin mining network and the global hash rate increases (as forecasted), mining becomes even more energy intensive. Ultimately, the national benefit will depend on the structure of the revenue-sharing model and whether the returns from mining justify its economic and opportunity costs. Therefore, the government should carefully evaluate energy allocation priorities to ensure long-term economic resilience, industrial competitiveness, and equitable value creation.
Copyright Business Recorder, 2025
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