Page 93 - CMA Journal (Nov-Dec 2025)

ECONOMY
O THER F EATURES

WATCH

By: ICMA Research and Publica ons Department

Mining for Sustainability: ESG Opportunities

in Pakistan’s Crypto Landscape

Pakistan has emerged as one of the leading countries mining and blockchain-based data center operations.
globally in cryptocurrency adoption and usage. With The policy objective is to utilize surplus electricity at
plans to formalize the sector through specialized marginal cost, without direct subsidies, while easing the
electricity tariffs and the establishment of a regulatory fiscal burden of capacity payments. Stakeholder
authority, the focus is no longer on whether consultations are ongoing to design tariffs suitable for
cryptocurrency should be regulated, but on how its emerging digital industries.
growth may impact Pakistan’s already constrained
Globally, electricity costs represent 60–70% of Bitcoin
energy resources, rising carbon emissions, and ESG
miners’ operating expenses, making power pricing the
commitments.
primary determinant of mining location decisions.
Pakistan’s Energy Baseline, Emissions Pakistan’s surplus capacity offers a potential comparative
Profile, and Bitcoin’s Materiality advantage provided supply remains stable.
Pakistan’s total annual electricity consumption is International experience highlights the risks of poorly
approximately 132.32 terawatt-hours (TWh), reflecting designed incentives. Bitcoin mining consumes over 130
a power system already under strain from capacity TWh of electricity annually worldwide, exceeding the
payments, affordability concerns, and supply instability. total electricity consumption of several countries. China
Within this constrained energy envelope, Bitcoin banned crypto mining due to environmental and energy
accounts for an estimated 65.16% of crypto-related concerns; Kazakhstan imposed higher tariffs and taxes
electricity demand associated with Pakistan, making it following shortages; Iran permits mining but frequently
the dominant source of crypto-related energy intensity. suspends operations during peak demand; while El
Salvador links mining to geothermal energy to reduce
According to the Cambridge Bitcoin Electricity carbon intensity.
Consumption Index (CBECI), Pakistan’s annual carbon
emissions from Bitcoin mining stand at 43.943 million These examples demonstrate that electricity pricing
tons of CO2 (MtCO2), placing the country 18th among the alone is insufficient and must be accompanied by
world’s most polluting economies. This underscores how environmental and grid-stability safeguards.
energy-intensive digital activities can become
climatically material for countries with constrained Governance and Regulatory Developments
energy systems. Pakistan has begun strengthening its institutional
Bitcoin relies on the Proof-of-Work (PoW) consensus framework to address crypto-related risks. The Economic
mechanism, one of the most energy- and Coordination Committee (ECC) approved an Rs. 800
carbon-intensive blockchain systems. When mapped million Technical Supplementary Grant for the Pakistan
onto Pakistan’s fossil-fuel-heavy electricity mix, this Virtual Asset Regulatory Authority (PVARA) to enhance
creates embedded carbon emissions, increasing risks to regulatory capacity and develop a formal framework for
climate commitments and energy-sector reform virtual assets aligned with international standards,
objectives. including FATF requirements.
Electricity Tariffs, Surplus Power, and PVARA is mandated to oversee the licensing and
Mining Incentives supervision of digital asset service providers, with a focus
on investor protection, AML/CFT risk mitigation, and
To make productive use of surplus electricity, Pakistan is responsible innovation. This signals growing recognition
designing specialized tariffs to incentivize cryptocurrency of virtual assets as part of the formal financial system.

ICMA’s Chartered Management Accountant, Nov-Dec 2025 91