(Reuters) - PESHAWAR, Pakistan - A minister overseeing a new government crypto policy told Reuters on Wednesday that the Pakistani province of Khyber Pakhtunkhwa is planning to construct two hydroelectric-powered pilot "mining farms" to capitalize on a bullish global cryptocurrency market.
The announcement comes as cryptocurrencies gain mainstream acceptance, with Bitcoin's price hitting record highs as investors such as Elon Musk pour money into it, and Morgan Stanley becoming the first major U.S. bank to offer bitcoin funds to its wealth management clients.
Crypto mining farms necessitate large investments in computer data centers that consume a lot of electricity.
Pakistan has formed a federal committee to drought a new crypto policy, despite India's plans to outright ban cryptocurrencies.
The mining project's cost has yet to be decided.
"People have already approached us for investment, and we want them to come to Khyber Pakhtunkhwa, earn some money, and have the province benefit as well," Zia Ullah Bangash, advisor to the provincial government on science and technology said.
However, both cryptocurrency mining and trading are currently illegal in Pakistan, and federal authorities would need to lay out a clear path to legalization before the industry could be officially opened to investors.
The State Bank of Pakistan stated in 2018 that cryptocurrencies were not legal tender and that no one had been allowed to deal in them in Pakistan.
Pakistan is also on the global Financial Action Task Force's grey list, with cryptocurrencies being one of the areas the global money laundering watchdog has asked Islamabad to better regulate.
Despite this, cryptocurrency mining and trade prosper in Pakistan, with apps like Binance and Coinbase among the most popular downloads, according to web analytics firm 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.”