How Pakistan Is Using AI Data Centres to Turn Surplus Electricity Into Opportunity
In Pakistan's power grids, when the sun dips low or demand drops, there lies a quiet truth "" many power plants and generation facilities produce more electricity than is being used. This surplus, once a burden, is now being seen as a chance. The government is turning this idle power into engines of innovation: AI data centres, bitcoin mining, and digital infrastructure. But is this path golden, risky, or somewhere in between?
What Has Pakistan Announced / Underway
Here are the key steps the government has already taken:
- Allocation of 2,000 MW of electricity for Bitcoin mining & AI data centres: In late May 2025, the Finance Ministry and Pakistan Crypto Council (PCC) revealed a plan to dedicate 2,000 megawatts (MW) from surplus electricity for these operations.
- Creation of Pakistan Crypto Council: A government-backed body under the Ministry of Finance, established to regulate blockchain, crypto assets, AI data centres etc. Bilal Bin Saqib leads PCC.
- Incentives being considered: To attract investment, the government is discussing tax holidays, customs duty exemptions on equipment, and favorable electricity tariffs (marginal cost pricing) for AI/data centre ventures.
- Power sector has existing surplus: Pakistan reportedly has about 7,000 MW of under-utilized generation capacity. Utilizing even a portion can help reduce wasted capacity payments or inefficiencies.
- Marginal cost of surplus power has been identified: Government figures suggest cost around Rs 24 per unit (kWh) for marginal surplus electricity. This is relatively low but still higher than rates in some jurisdictions for similar operations. There are proposals to subsidize for AI/crypto firms or use special purpose vehicles to buy power from distribution companies (Discos) at marginal cost and pass benefits via profit sharing.
Why This Makes Sense: Opportunities
Turning surplus electricity into a revenue stream through AI/data centres/crypto mining offers multiple possible benefits:
- Economical use of idle power: Idle generation capacity is a cost burden: maintenance, fuel, capacity payments. If that unused capacity can be put to work, the fixed costs (and some variable ones) can generate returns rather than loss.
- Foreign Direct Investment (FDI) & job creation: Big players in AI or crypto infra often bring capital, technology, skills. The government hopes to attract investors, create high-tech jobs, training, related services.
- Digital infrastructure & data sovereignty: Building AI data centres locally helps reduce dependency on foreign infra, lowers latency, enhances data security. For services like cloud, AI model training, storage, being closer to users yields advantages.
- Exporting digital services: Instead of exporting physical goods only, Pakistan can "export" compute power, data storage services, AI inference, mining. That translates (in many proposals) into USD revenues, not just rupees. Crypto-mining also potentially gives exposure to international cryptocurrency.
- Utilization of renewable and off-grid potential: Some surplus power comes from solar, wind, or underused plants. There are ideas to pair these with computing services to make clean/green computing an exportable product.
What Pakistan Might Lose or What Risks Are There
For every opportunity, there are risks. It's not yet a done deal; many trade-offs need clear management.
| Risk / Concern | Why It Matters in Pakistan's Context |
|---|---|
| Energy supply stability | Pakistan has often faced load shedding and transmission losses; pushing power to data centres must not compromise residential, industrial supply. Regions with surplus may be remote; transmission and grid constraints matter. |
| Tariffs & cost competitiveness | Even "marginal cost" power at ~Rs 24/kWh may not be low enough to compete globally; many mining operations elsewhere get rates ½ or less. Unless electricity, cooling, infrastructure, regulatory cost are favorable, the business model may be weak. |
| Environmental & sustainability concerns | Heavy compute, AI training, crypto mining are energy-intensive. If powered by fossil fuel generation, this could increase emissions. If renewable energy isn't integrated well, there could be environmental backlash. |
| Cooling & infrastructure needs | Data centres require cooling (water, HVAC), sometimes water is scarcer in areas with surplus power; land, fibre connectivity, latency, backup power also matter. Locations matter. |
| Regulation, transparency, and oversight | Without strong regulation, crypto mining can lead to illicit flows, money laundering concerns, or unfairness. The legal status of cryptocurrencies still evolving. Trust from investors depends on stable policy. |
| Impact on electricity rates/consumers | Subsidizing rates for crypto/AI centres could shift costs elsewhere, possibly increasing cost for domestic or industrial users unless carefully managed. Also tariff interventions may conflict with IMF or other international lenders. |
How Pakistan Is Handling Some of These Challenges (or Planning To)
From what's public, there are efforts and proposals to mitigate risks:
- The Pakistan Crypto Council is a regulatory body aiming to set rules, oversight, and attract transparent investment.
- Power will be allocated from surplus, ideally without affecting regular demand. Using generation capacity that is idle/off-peak helps.
- Discussions are underway for favorable electricity tariff structures, possibly profit"sharing models, or special vehicles that purchase power at marginal cost and supply computing firms under regulated terms.
- There is intention to use renewable energy (solar, wind) more, especially for new data centres or crypto operations, to reduce environmental impact.
Will It Work? Key Factors That Will Decide Success
Here are what I believe will decide whether the plan becomes real and beneficial, or becomes another aspirational headline:
- Clear and stable policy / regulation: Investors need certainty "" what tariffs will be, what tax treatment, what legal status of mined crypto or AI data usage. Sudden policy changes risk driving away investment.
- Efficient infrastructure & location choices: The data centres/mining operations must be sited where electricity is truly surplus, where fibre/internet connectivity is strong, where cooling (power usage, water or air) is efficient.
- Integration with renewable resources: If surplus comes mostly from fossil fuel plants, then environmental/climate costs may be high. Tying operations with solar/wind could reduce costs and carbon footprints over time.
- Transparency & auditing: To prevent misuse, corruption, or unplanned costs, it will be important to have oversight, clear contracts, perhaps public disclosures of what is happening, and who benefits.
- Balancing domestic need with export/economic gain: Ensuring that ordinary people, industry, hospitals etc., don't get worse power service while the surplus is used for digital exports. Also ensuring that pricing of power remains fair and sustainable.
- Skill / workforce / local tech capacity: Having people trained to run large AI data centres, maintain them, secure them, cool them, manage their data / cybersecurity etc. If everything is imported/managed by foreign companies, local benefit may be smaller.
What This Could Mean: Scenarios & Impacts
If all goes well, some possible outcomes are:
- Pakistan becomes a regional hub for AI infrastructure / crypto mining. Surplus electricity becomes a source of foreign exchange income.
- High-tech jobs, specialized engineering, data centres for AI / cloud services proliferate; more youth get trained.
- Data sovereignty improves, latency for services inside Pakistan improves (cloud computing, AI).
- Government revenues increase (tax, shares, equipment duties etc.); perhaps even national Bitcoin reserve or digital asset holdings.
- Promoting renewable energy investments to power these centres could accelerate Pakistan's green transition.
Alternatively, in less favorable scenario:
- If electricity infrastructure fails (transmission loss, outages), data centre uptime will suffer; investments may underperform.
- Environmental concerns / public pushback if seen as favouring crypto / foreign profit over local welfare or exacerbating climate issues.
- If costs (electricity, cooling, tariffs, taxes) not competitive, global firms may skip Pakistan for cheaper alternatives.
- Regulatory missteps or unclear crypto laws may scare off international entities or cause legal risks.
My Take: Is This a Smart Move?
In my view:
Yes "" this is a clever strategy if done well. Pakistan has what many countries want: power generation capacity (some idle), land, growing internet infrastructure, and a large, young population. Converting surplus electricity into digital infrastructure is more forward-looking than letting electricity be wasted.
But "if done well" is the catch. It requires balancing benefits and risks carefully. The policies must protect regular consumers, ensure environmental sustainability, and build local capacity. The reward could be large: foreign investment, digital exports, job creation, modernization.
Conclusion (Poetic Whisper)
Imagine power plants humming all night, lights dimmed in factories, yet lights blinking in server rooms, AI-brains learning, crypto rigs crunching, all powered by electricity that once stood idle. Pakistan can turn its silent surplus into thunderous wealth "" creativity instead of waste, innovation instead of inertia.
If the government walks this path with clarity, fairness, and vision, then what was once idle power may become the backbone of a brighter, tech-rich tomorrow.
