Crypto Mining Regulations in Pakistan: What You Need to Know in 2025

Pakistan’s crypto mining rules changed overnight in 2025

For years, crypto mining in Pakistan existed in a legal gray zone. The State Bank of Pakistan said digital currencies were illegal. But millions of Pakistanis still held wallets. Miners ran rigs in garages, using residential power, hoping no one would notice. That changed in July 2025, when the government passed the Virtual Assets Act and created the Pakistan Virtual Asset Regulatory Authority (PVARA) an autonomous federal body tasked with licensing and overseeing all virtual asset activities, including mining, in Pakistan. This wasn’t just a policy tweak-it was a full-scale reversal.

Now, mining isn’t just allowed-it’s being actively encouraged. The government has set aside 2,000 megawatts (MW) of electricity just for crypto mining and AI data centers. That’s enough power to run a small country. And it’s not coming from new power plants. It’s from coal stations running below capacity and solar surpluses in regions where small businesses shut down and left the grid underused. This isn’t about creating more demand-it’s about using waste energy.

Who can mine legally now?

You can’t just plug in a rig and start mining anymore. To operate legally, you need a license from PVARA. But the bar is high. Only companies that already have approval from major global regulators can apply. That means you need to be licensed by the U.S. SEC, the UK’s FCA, the EU’s VASP framework, UAE’s VARA, or Singapore’s MAS. Local startups? Not yet. Phase 1 of licensing (Q3-Q4 2025) is only for big international operators with hash rates over 1 exahash per second (EH/s). Small miners will have to wait until Phase 2 in early 2026, when applications open for domestic operations with at least 100 petahashes per second (PH/s).

Even then, you can’t use cheap residential electricity. All commercial mining must run on industrial tariffs and require a minimum 500 kW connection. This was a direct response to IMF pressure-Pakistan’s government doesn’t want miners siphoning off subsidized power meant for households. If you’re caught using residential lines, your license gets revoked, and you face fines.

Taxes on mining income are now clear

Before 2025, no one knew how to report crypto mining income. Now, it’s straightforward. All income from mining is treated as regular income and taxed at progressive rates: 5% for earnings under ₨600,000, rising to 35% for income over ₨12 million. If you sell the Bitcoin or other coins you mined, you pay a flat 15% capital gains tax. You must file this using Form IT-1 by September 30 each year. PVARA now shares mining data directly with the Federal Board of Revenue (FBR), so hiding income isn’t an option anymore.

There’s also a new rule: every mining operation must report its energy use, hardware specs, and security protocols. PVARA wants to track not just who’s mining, but how efficiently they’re doing it. The goal? To prevent energy waste and ensure miners are using modern, efficient ASICs-not old GPUs that burn through power for little return.

Environmental rules are part of the law now

Pakistan’s mining policy includes one of the strictest environmental clauses in the region. By 2027, all licensed mining operations must use at least 70% renewable or repurposed energy. That means you can’t just plug into the grid and call it a day. You need to prove you’re using surplus coal power, solar waste, or hydro excess. The draft guidelines released in August 2025 make it clear: new coal plants won’t be built just for miners. The focus is on cleaning up existing inefficiencies.

This isn’t just greenwashing. Pakistan has one of the highest rates of power theft and misallocation in South Asia. By tying mining to underused infrastructure, the government is turning a problem into a solution. It’s also why many mining farms are being built near coal stations in Sindh and Punjab-where grid losses are highest and unused capacity is greatest.

Shariah-compliant mining is now an option

One of the biggest hurdles to crypto adoption in Pakistan was religious concern. Many scholars argued that cryptocurrency was haram because it lacked intrinsic value and involved speculation. PVARA addressed this head-on by creating a regulatory sandbox for Shariah-compliant mining. Operators can now apply for special certification if their operations meet Islamic finance principles: no leverage, no speculation on price swings, and no involvement with tokens deemed gambling-based. This has opened the door for banks and institutional investors who previously stayed away.

Some mining pools have already started offering halal-certified staking and mining services. While still niche, this move signals that Pakistan isn’t just trying to attract money-it’s trying to build a system that fits its cultural and religious context.

Why the sudden change?

Pakistan has over 40 million crypto wallets-the third-highest number in the world after India and the U.S. That’s not a coincidence. It’s proof that people are already using crypto, even if it’s illegal. The government realized it couldn’t stop it. So instead of fighting it, it decided to control it.

There’s also the economic angle. Pakistan’s economy is struggling. The rupee is weak. Foreign reserves are low. Crypto mining brings in hard currency-Bitcoin, Ethereum, stablecoins-that can be converted into dollars and used to pay for imports. Analysts estimate the country’s crypto market is worth $21 billion as of September 2025. If mining contributes even 15% of that, it’s over $3 billion in new capital flowing in.

And then there’s the global positioning. Pakistan wants to be seen as a tech-forward nation. By launching PVARA and setting up a formal mining framework, it’s sending a message: we’re not behind the curve-we’re building our own rules. PVARA’s chair, Bilal bin Saqib, put it bluntly: “We are not standing behind the world. We are establishing our own trend.”

The contradictions haven’t disappeared

But it’s not all smooth sailing. The State Bank of Pakistan still says digital currencies aren’t legal tender and that banks can’t deal with them. That creates a real problem for miners. How do you pay for equipment? How do you get paid for your mining rewards? Most mining pools pay out in crypto, but Pakistani banks won’t accept crypto deposits. Some miners are turning to peer-to-peer platforms like LocalBitcoins or Paxful. Others are using offshore accounts in Dubai or Singapore.

There’s also confusion over who’s in charge. The Pakistan Crypto Council (PCC), which pushed for legalization, is still under the Ministry of Finance. But in September 2025, a Senate committee recommended moving it to the Ministry of Information Technology. Why? Because crypto isn’t a financial product-it’s a technology. The debate isn’t over. It’s just beginning.

What’s next for crypto mining in Pakistan?

By the end of 2025, PVARA expects to issue 20-30 licenses to international firms. These will likely be owned by companies from the U.S., South Korea, and the UAE. Domestic miners will have to wait. But in 2026, when Phase 2 opens, we’ll see a wave of local startups-especially in Lahore, Karachi, and Faisalabad-where internet infrastructure is strong and electricity costs are lower.

The real test will be enforcement. Can Pakistan stop illegal mining? Can it prevent corruption in licensing? Will banks eventually open doors to crypto businesses? These are unanswered questions. But one thing is clear: crypto mining in Pakistan is no longer underground. It’s official. And it’s here to stay.