The idle power paradox and Pakistan's Bitcoin energy plan

As of March 2025, Pakistan boasted an installed power capacity of 46600 MW, a slight increase from the previous year.

Pakistan is grappling with the 'idle power paradox,' especially pertinent as the South Asian nation sets its sights on an ambitious Bitcoin energy plan.

Pakistan is grappling with the 'idle power paradox,' especially pertinent as the South Asian nation sets its sights on an ambitious Bitcoin energy plan.

According to Statista, Pakistan's installed power capacity stood at 46,600 MW as of March 2025, a modest increase from the previous year. However, a significant portion of this capacity remains idle, particularly during the off-peak winter months when electricity demand can decrease to as low as 12,000 MW.

A substantial factor contributing to this issue is the capacity payments, which are fixed fees paid to power plants even if they are not producing electricity. These payments have reached a staggering sum of 2.1 trillion Pakistan rupees ($7.45 billion) per year.

This cost is ultimately passed on to consumers, even when the plants are in a dormant state.

Thermal power, which includes coal and gas, makes up 56% of the installed capacity but contributes only 46% to the actual generation. This is due to the presence of older, less efficient plants that are kept on standby, continuously collecting capacity payments.

In contrast, hydropower, nuclear power, and renewables cover the remaining shortfall in electricity generation. Notably, Pakistan has witnessed a remarkable surge in its renewable energy adoption, specifically solar power, leading to new challenges.

The country's net-metered solar capacity experienced a substantial increase from 1.3 GW in 2024 to nearly 4.9 GW within a year. This rapid expansion was driven by the import of over 17 GW of Chinese solar panels in 2024 alone.

The solar boom has contributed to instability in the power grid due to the fluctuating nature of solar energy supply. It has also resulted in rising electricity tariffs for users who do not have net-metering systems and unequal access to clean energy for poorer households.

Consumers in Pakistan are currently subject to high electricity rates, which are estimated at around 16¢/kWh for businesses, further propelling the solar energy adoption and perpetuating the cycle of costly imbalance in the energy mix.

Bitcoin energy plan

With Pakistan grappling with an energy crisis and ballooning energy bills, the nation is now exploring an unconventional move: diverting idle power to Bitcoin mining and AI data centers.

This strategy, which is being touted by some officials and industry figures, aims to monetize the off-peak electricity that would otherwise go to waste and generate revenue through digital assets.

As the World Bank notes, Pakistan’s thermal power plants are often used at low rates, especially during the winter months when demand drops. For instance, in 2022, the plants were used at an average of 45% of their capacity, and in December 2022, the capacity factor fell to 33% during the off-peak hours.

This low utilization, despite the high tariffs charged to consumers for electricity, presents a unique opportunity to redirect up to 2,000 MW of idle power to alternative uses.

During periods of low electricity demand, such as the winter months when demand can drop as low as 12,000 MW, this surplus capacity could be channeled into Bitcoin mining and AI data centers.

This strategy is envisioned to ease the strain on the power grid by absorbing the excess supply and generate revenue for the government through digital asset mining and related services.

However, critics have raised concerns about this plan, highlighting the increased reliance on fossil fuels for thermal power generation, which contributes to environmental pollution.

Moreover, there are worries that the benefits of this initiative might not reach ordinary Pakistanis, who are already burdened by the rising cost of living in a country ranked among the most unequal in the world.