PESHAWAR: The Khyber Pakhtunkhwa government is planning to build two hydroelectric-powered pilot “mining farms” to capitalise on a bullish global cryptocurrency market, a minister overseeing a new government crypto policy told Reuters on Wednesday.

The announcement comes as cryptocurrencies are gaining mainstream acceptance, with Bitcoin’s price reaching record levels as investors such as Elon Musk pour funds into it, and the first big US bank, Morgan Stanley, offering its wealth management clients access to bitcoin funds.

Crypto mining farms involve large investments in computer data centres which require vast amounts of power.

Pakistan has formed a federal committee to formulate a new crypto policy, even as neighboring India is planning to ban cryptocurrencies entirely. The cost of the mining project has yet to be determined.

“People have already been approaching us for investment and we want them to come to Khyber Pakhtunkhwa, earn some money and have the province earn from that as well,” Ziaullah Bangash, adviser to the provincial government on science and technology, said.

Both mining and trading in cryptocurrencies currently exists in a legal grey area in Pakistan, though, and federal authorities would have to provide a clear path towards legalising the sector before it could be formally opened to investors.

In 2018, the State Bank of Pakistan said cryptocurrencies were not legal tender and the regulator had not authorised anyone to deal in them in the country. Pakistan also is currently on the global Financial Action Task Force grey list, and one of the areas the global money laundering watchdog has asked Islamabad to better regulate is cryptocurrencies.

Still, mining and trading in cryptocurrencies thrives in Pakistan, with apps like Binance and Coinbase among the most popular downloads in the country, according to web analytics company SimilarWeb.

“It’s really just our government that is not participating right now, people all over Pakistan are already working on this, either mining or trading in cryptocurrencies and they are earning an income from it,” Bangash said. “We are hoping to bring this to a government level so things can be controlled and online fraud or other scams can be prevented.

Published in Dawn, March 19th, 2021