Just add water: Pakistan between the crypto dream and harsh reality

First Steps in the Digital Economy

Pakistan is striving for technological sovereignty; however, these ambitions face objective economic and political realities, a low standard of living, and a protracted conflict with India, which controls the sources of key rivers.

ForkLog figured out how the Islamic republic with great human potential is trying to build a digital future in conditions of instability.

First Steps in the Digital Economy

Pakistan, a country with a population of over 255 million people, is actively embracing digital technologies. In recent years, there has been a rise in interest in cryptocurrencies and artificial intelligence. Young people, especially in large cities like Karachi and Lahore, are increasingly using blockchain applications and participating in trading.

This is not just a trend — for many, it is a way to protect themselves from financial instability. Digital assets are primarily an attractive tool for preserving and increasing capital against the backdrop of high inflation of the Pakistani rupee. For the young, tech-savvy population, cryptocurrencies have become a means for cross-border transfers and earning.

However, not all Pakistanis can afford high-speed internet yet. According to data for 2025, only 45.7% of the population has a stable connection, and rural areas often remain completely outside the coverage zone. This significantly hinders the mass adoption of digital currencies.

Cryptocurrency Paradox

The situation with cryptocurrencies in Pakistan is a classic example of the conflict between the government and the population. Currently, digital assets are in a gray area. In 2022, the authorities of Pakistan considered the possibility of banning cryptocurrencies and planned to block websites related to digital assets. At the same time, the state bank announced the launch of a CBDC by 2025.

Despite this, the country demonstrates one of the highest levels of acceptance of digital assets in the world. Thanks to the activity of retail investors, Pakistan entered the top ten global leaders in their adoption in 2024.

Data: Chainalysis. Analysts also predict further rapid rise: it is expected that by the end of 2025, the number of crypto users in the country will exceed 27 million people, and the industry's revenue will reach $1.6 billion.

Dreams of Bitcoin Mining and State Reserves

In 2021, the province of Khyber Pakhtunkhwa announced plans to build state farms for the extraction of digital gold. The idea was to use cheap hydroelectric power to replenish the treasury.

The initiative stalled until in 2025 the head of the Cryptocurrency Council Bilal bin Sakib announced plans to direct excess electricity to Bitcoin mining and powering data centers for the AI segment. Later, local media learned that the government of Pakistan would allocate 2 GW for these purposes.

The emphasis is on utilizing excess resources from renewable sources — hydro, wind, and solar energy. This is an example of a balanced ecological agenda without ludditism: the country is not afraid of technology but seeks to minimize harm to nature.

Soon, Sakib announced the creation of a national reserve in digital gold. These intentions, like other steps taken by the country in the field of cryptocurrencies and artificial intelligence, raised concerns at the IMF.

Pakistan has announced ambitious plans to use excess renewable energy for mining and creating a Bitcoin fund. However, a clear legislative framework is required for the practical implementation of these initiatives. Currently, such a legal basis has not yet been developed in the country, which is the main obstacle on the path to the goal.

Digital Silk Road

Pakistan's technological rise would have been impossible without China. Beijing is Islamabad's main partner, and this cooperation goes far beyond politics. It is embedded in the mega project of the China-Pakistan Economic Corridor (CPEC).

Key areas of support:

• infrastructure — Chinese companies are actively involved in laying fiber optic cables. One example is the PEACE submarine cable project (Pakistan & East Africa Connecting Europe), which reduces Pakistan's dependence on existing communication lines and directly connects it with friendly countries;
• artificial intelligence and surveillance — China is helping to implement "Safe City" systems in Islamabad, Lahore, and other megacities. These are comprehensive platforms with thousands of cameras and AI algorithms for facial recognition and behavior analysis;
• 5G connection — Chinese giants Huawei and ZTE are the main contractors for testing and deploying fifth-generation networks in Pakistan.

For China, a technologically developed and stable Pakistan is a guarantee for the safety of its investments in CPEC and a key hub in the Belt and Road Initiative.

The Internet Under Control

The global network in Pakistan is strictly regulated, but the methods differ from those in China. While the "Great Chinese Firewall" is a complex, proactively working content filtering system, the Pakistani approach is reactive and crude.

The main regulator is the Pakistan Telecommunication Authority (PTA). Its toolkit:

• platform blocking — the authorities have unhesitatingly closed access to YouTube, TikTok, Wikipedia, and just recently to the social network X at the national level. The blocks are targeted and temporary;
• Shutdowns - during political protests or riots, the government regularly disables mobile internet across the country or in specific regions. This is considered an effective measure to combat the coordination of protesters;
• Traffic throttling ( — reducing access speed to certain resources to make their use uncomfortable.

Such methods cause direct damage to the digital economy, but the authorities consider them justified to maintain control.

Water Lever of India

The main vulnerability of Pakistan is access to water. The country critically depends on rivers that originate in India or in the Kashmir controlled by it. This is a legacy of the partition of British India, which New Delhi uses as a powerful lever of pressure.

The relations are governed by the Indus Waters Treaty of 1960. According to it, Pakistan receives the flow of the "western" rivers )Indus, Jhelum, Chenab(, while India receives the "eastern" )Ravi, Beas, Sutlej(. However, India has the right to build hydroelectric power stations on the "Pakistani" rivers.

The latest escalation of the Kashmir conflict, which began in April 2025, has once again highlighted this vulnerability. In response to the escalation, India restricted the flow of water in the Chenab and Jhelum rivers, which are used by Pakistan for agriculture and electricity generation. Such actions allow India to exert direct economic pressure on its neighbors.

In this context, the development of technologies becomes a matter of survival. Artificial intelligence is already being used to optimize water consumption in agriculture, and the transition to alternative energy sources, including mining at hydroelectric power stations, allows for a reduction in critical dependence on rivers controlled by India.

Economic Realism and the Key to the Future

To understand how realistic Pakistan's plans for digitalization and cryptocurrencies are, it is worth looking at the economic indicators. The average income level in the country is $1824 per year — an extremely low level by global standards. Therefore, purchasing, for example, mining equipment remains an insurmountable task for the overwhelming majority of Pakistanis.

This figure explains everything: why the population is fleeing to cryptocurrencies from poverty, why the government cannot finance its own IT projects, and why the country is so heavily dependent on Chinese loans and technologies. Talks about creating complex AI ecosystems or buying Bitcoin for state reserves seem disconnected from reality, where basic needs for millions of people are not being met.

Pakistan is at a crossroads. On one side is a huge human capital, interest in digital finance, and support from China. On the other side are chaotic regulations, poverty, and ongoing conflicts with India.

The country needs to find a balance between ambitions and reality. If the plans for Bitcoin reserves and mining prove to be successful, it could serve as an example for other developing countries. However, without addressing basic issues — from internet access to energy stability — such projects risk remaining on paper.

This path is fraught with risks: from digital authoritarianism to economic isolation in case of failure. But for the country, such a technological leap could be a chance for a better future.