Crypto Mining Regulations in Pakistan 2025: Rules, Taxes, and Power Allocation
Oct, 21 2025
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Key Takeaways
- The Virtual Assets Act, 2025 created the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee all mining activities.
- Pakistan allocated 2,000 MW of surplus power for Bitcoin mining and AI data centres.
- Mining income is taxed as regular income (5‑35%) and a flat 15% capital‑gains tax on crypto sales.
- Licensing requires FATF‑compliant AML/KYC, industrial‑tariff electricity, and a minimum 70% renewable‑energy mix by 2027.
- Phase 1 (late 2025) targets large‑scale international miners; Phase 2 (early 2026) opens to domestic operators with at least 100 PH/s.
Pakistan’s stance on crypto mining regulations Pakistan switched from a vague ban to a full‑blown framework in 2025. If you’re a miner, an investor, or a policy watcher, you need to know what the new rules mean for licensing, taxes, and energy use. This guide walks you through the key pieces of the law, the authority that enforces it, and the practical steps you’ll take to stay compliant.
From Grey Area to Formal Law
Until mid‑2024, the State Bank of Pakistan (SBP) treated all virtual assets as illegal under banking statutes, while the Pakistan Crypto Council (PCC) pushed for broader adoption. The clash left miners in a legal limbo-no clear permits, no official tax guidance, and constant risk of shutdown.
That changed on 15 July 2025 when the government passed the Virtual Assets Act, 2025a comprehensive law that defines virtual‑asset service providers, licensing procedures, and taxation rules for crypto activities. The act established a dedicated regulator, the Pakistan Virtual Asset Regulatory Authority (PVARA), to replace the patchwork oversight that previously existed.
The Role and Structure of PVARA
Pakistan Virtual Asset Regulatory Authority (PVARA)an autonomous federal body tasked with licensing, monitoring, and enforcing compliance for all virtual‑asset activities in Pakistan reports directly to the Ministry of Finance but operates independently to meet FATF, IMF, and World Bank standards.
The board includes representatives from the SBP, the Federal Board of Revenue (FBR), the Ministry of Energy, and a legal adviser on Shariah compliance. Bilal bin Saqib serves as both chair of PVARA and minister of state for crypto and blockchain, giving the authority strong political backing.
Licensing Process for Miners
All mining operations-whether a single ASIC farm or a large pool-must obtain a license from PVARA before turning on a hash‑rate. The application package includes:
- Company profile and proof of incorporation in Pakistan.
- Detailed technical plan: ASIC model, expected hash‑rate (in PH/s or EH/s), and energy consumption figures (J/TH).
- Evidence of compliance with FATF AML/KYC standards, including a risk‑assessment report.
- Power‑supply agreement showing industrial‑tariff rates and a minimum 500 kW connection.
- Environmental impact statement proving at least 70% of electricity will come from renewable or repurposed surplus sources by 2027.
- For international firms, proof of licensing from a recognized regulator (SEC, FCA, EU VASP, VARA, MAS).
Applications are reviewed in two phases. Phase 1 (Q3‑Q4 2025) accepts only operations projected to generate >1 EH/s, targeting major global miners. Phase 2 (Q1 2026) opens to domestic players with a minimum of 100 PH/s.
Taxation Framework
Mining earnings are now treated as ordinary income for tax purposes. The progressive rates are:
- 5 % on income up to ₨600,000
- 15 % on ₨600,001‑₨2 million
- 25 % on ₨2 million‑₨12 million
- 35 % on income above ₨12 million
When miners sell the cryptocurrency they have produced, a flat 15 % capital‑gains tax applies. All figures must be reported on Form IT‑1 by 30 September each year, and the FBR receives transaction data directly from PVARA’s compliance platform.
Electricity Allocation and Environmental Rules
In August 2025 the Pakistani government earmarked 2,000 MW of surplus power for crypto mining and AI data centres. The capacity is sourced mainly from under‑utilised coal plants and regions where industrial demand is low. PVARA’s draft guidelines (28 August 2025) impose three key conditions:
- Mining farms must use industrial‑tariff electricity; residential subsidised rates are prohibited.
- At least 70 % of the power must be renewable or repurposed by 2027 (solar, wind, or excess hydro).
- Facilities must report real‑time energy consumption to the National Grid operator for load‑balancing.
If the full 2,000 MW is deployed with state‑of‑the‑art ASICs (30‑40 J/TH), Pakistan could add roughly 60 EH/s to the global Bitcoin network, pushing it into the top‑five mining hubs.
Compliance with International Standards
PVARA’s licensing framework explicitly references FATF recommendations on anti‑money‑laundering (AML) and counter‑terrorist‑financing (CTF). The authority also aligns with IMF concerns about fiscal leakage by enforcing industrial‑tariff rates and prohibiting subsidised electricity for miners.
To satisfy Shariah‑compliance requests, PVARA created a sandbox where miners can certify that their operations do not involve interest‑based financing or prohibited assets. The sandbox currently accepts proposals from three local firms, paving the way for “Islamic‑compliant mining” to enter the market.
Future Outlook and Remaining Challenges
While the regulatory architecture looks solid, implementation hurdles remain:
- The SBP still refuses to recognize cryptocurrencies as legal tender, limiting miners’ access to banking services.
- IMF negotiations continue over the subsidised‑electricity debate; any concession could reshape tariff rules.
- Domestic startups face a high entry barrier because PVARA requires prior licensing from a major overseas regulator.
- Environmental groups are monitoring the renewable‑energy mix, pushing for stricter timelines than the 2027 target.
Analysts estimate that, if the 2,000 MW allocation is fully utilized, mining could contribute 15‑20 % of Pakistan’s $21 billion crypto market value by 2027. The government’s strategic aim is to become a “global‑level” mining hub, not just a regional player.
Quick Reference Table: Licensing vs. Tax Obligations
| Aspect | Licensing (PVARA) | Taxation |
|---|---|---|
| Eligibility | FATF‑compliant AML/KYC, industrial‑tariff power, renewable‑energy quota | Progressive income tax (5‑35%) + 15% capital‑gains tax |
| Power requirement | Minimum 500 kW connection, industrial rates only | Tax base calculated on net crypto income after power costs |
| Minimum hash‑rate | Phase 1: >1 EH/s; Phase 2: ≥100 PH/s | Tax applies to all earned crypto, regardless of hash‑rate |
| International approval | License from SEC, FCA, EU VASP, VARA, or MAS required | No extra tax for foreign‑registered miners beyond standard rates |
| Reporting | Real‑time energy and hash‑rate data to PVARA; annual Form IT‑1 | Annual filing by 30 Sept; FBR receives data from PVARA |
Frequently Asked Questions
Do I need a separate business license to mine Bitcoin in Pakistan?
Yes. Mining is classified as a Virtual Asset Service Provider under the Virtual Assets Act, 2025, so you must obtain a PVARA mining license before operating any ASIC farm.
Can I use residential electricity for my mining rig?
No. The regulations forbid subsidised residential rates. All licensed miners must connect to the grid under industrial tariffs and meet the minimum 500 kW connection size.
What taxes will I pay on mined Bitcoin?
Mining profits are taxed as ordinary income (5‑35% based on profit brackets). When you sell the Bitcoin, a flat 15% capital‑gains tax applies.
How does the 2,000 MW power allocation work?
The government has earmarked surplus capacity from under‑utilised coal plants and low‑demand regions. Licensed miners sign power‑supply agreements that lock in industrial‑tariff rates for the allocated megawatts.
Is there support for Shariah‑compliant mining?
Yes. PVARA runs a sandbox where miners can certify that their financing and operations meet Islamic law, allowing them to market the hash power as Shariah‑compliant.
Brian Collett
October 24, 2025 AT 15:20Anyone know if PVARA’s gonna let miners buy carbon credits for excess renewable power?
Wayne Overton
October 25, 2025 AT 12:13Alisa Rosner
October 25, 2025 AT 19:56MICHELLE SANTOYO
October 26, 2025 AT 12:40You want to be a global hub? Then stop treating miners like tax cows and start treating them like partners. Or better yet - ban the whole thing and save the grid. At least then we’d know where we stand.
Lena Novikova
October 27, 2025 AT 09:13Olav Hans-Ols
October 27, 2025 AT 19:17Biggest question: will local startups even survive Phase 1? The overseas license requirement feels like a wall for anyone without VC backing. But hey - if it works, Pakistan could be the Saudi Arabia of mining. 🤞
Kevin Johnston
October 28, 2025 AT 16:29Dr. Monica Ellis-Blied
October 29, 2025 AT 08:08And the 70% renewable mandate? Without grid-scale storage, it’s a fantasy. The FBR’s real-time data feed is technically impressive, but if miners cannot access banking services due to SBP’s stance, compliance becomes performative - not practical.
Herbert Ruiz
October 29, 2025 AT 17:36