In the rapidly changing global financial environment, Bitcoin is no longer a speculative tool—it is increasingly turning out to be a strategic tool for states in their policies. States around the world are trying out different ways to incorporate Bitcoin into their economic systems. Among the most different strategies are those adopted by El Salvador and Pakistan. While El Salvador is trying to accumulate Bitcoin as a national asset, Pakistan is trying to find ways to use Bitcoin mining as a strategy to harness its energy resources and technological capabilities.
This also raises a question: Should states go for Bitcoin hoarding or Bitcoin mining as a strategy? These strategies provide an understanding of how states perceive digital assets, economic sovereignty, and technological innovation in the decentralized finance era.
In the initial years of Bitcoin’s mainstream adoption, the need for a national Bitcoin strategy, sovereign crypto policy, or state bitcoin reserves has turned out to be an important theme in the global discourse.
Understanding National Bitcoin Strategies
Before engaging in a comparison between El Salvador and Pakistan, it is necessary to comprehend the two strategies that nations can use:
1) Bitcoin Hoarding (Accumulation Strategy)
Bitcoin hoarding is the process whereby a nation buys and holds Bitcoin as part of its national reserves. This strategy is similar to gold or foreign currency reserves.
2) Bitcoin Mining (Production Strategy)
Bitcoin mining is the process whereby a nation uses its computational power and energy to validate transactions and receive rewards in Bitcoin. This strategy can be used to create economic value through mining.
El Salvador’s Bitcoin Hoarding Model
Background
El Salvador marked a historic milestone in the development of global digital finance in 2021 by becoming the first nation in the world to adopt Bitcoin as a legal tender. This historic move made El Salvador a case study in the adoption of Bitcoin at the state level and put the nation at the forefront of global economic, political, and technological discourse.
With the decision to use Bitcoin as a legal currency in addition to the US dollar, El Salvador has shown its willingness to move beyond the boundaries and examine the idea of using decentralized currencies. This decision has drawn the attention of the international community, including investors, policymakers, and financial institutions.
The approach taken by the government is:
Purchasing Bitcoin directly as a part of the country’s asset management
Using Bitcoin as a part of the country’s economy, including payments and remittances
Holding BTC as a long-term sovereign asset, showing confidence in the future value of Bitcoin
This approach has positioned Bitcoin not only as a digital currency but also as a means for the implementation of economic policies.
Key Objectives of El Salvador’s Strategy
El Salvador’s Bitcoin hoarding strategy has been based on a number of economic, political, and technological considerations. The government of El Salvador has identified Bitcoin as a means for the transformation of its economy and an improvement in its position within the global economy.
The key objectives of El Salvador’s strategy are:
Reducing reliance on the US dollar and increasing independence of monetary policy
Attracting overseas investment and tourism; specifically targeting crypto-world investors and foreign investment and tourism seeking attractive regulatory environments
Improving access to financial services for the unbanked; previously unable to access any type of banking services
Establishing the country as the leader in the international cryptocurrency community and supporting innovation and entrepreneurism in the blockchain industry
In addition to the stated mandate, El Salvador's goal was to change its status from a developing country to being a modern technologically advanced country, with an emphasis on innovative financial systems and solutions.
Steps Taken by El Salvador
The measures taken by El Salvador to implement its Bitcoin accumulation strategy have been structural and technological, including the laws put in place to help integrate Bitcoin into the economy.
Some of the more significant measures taken under the Bitcoin accumulation strategy of El Salvador include:
Legalising Bitcoin as a legal tender, thus requiring it to be used to pay for goods and services with USD side-by-side.
Creating a national digital wallet system that will allow the citizens of El Salvador to easily send, receive and store their Bitcoins.
Buying Bitcoin on a regular basis during times of price declines in the market, this shows that El Salvador has a long-term accumulation strategy and is not a short-term speculator of Bitcoin.
Promoting and supporting the adoption of Bitcoin by citizens and businesses by providing incentives and assistance.
Establishing infrastructure supporting Bitcoin and developing branding initiatives relative to Bitcoin, such as digital payments, pro-Bitcoin policies and marketing campaigns on a global scale.
A notable financial innovation linked to this strategy is the issuance of Volcano Bonds (EBB-1). These bonds were designed to raise capital for Bitcoin-related infrastructure and energy projects, tying sovereign debt instruments directly to Bitcoin-based development initiatives.
Advantages of Bitcoin Hoarding
Pros:
Potential long-term appreciation of national assets
Increased global visibility and innovation branding
Hedge against inflation and currency devaluation
Strategic diversification of national reserves
Cons:
High volatility risk
Political and institutional criticism
IMF and international financial pressure
Uncertainty in public adoption
El Salvador’s strategy reflects a bold vision: treating Bitcoin not merely as technology but as a geopolitical asset.
Bhutan: A Quiet Sovereign Mining Model
While El Salvador and Pakistan represent highly visible policy approaches, Bhutan offers a more discreet third model. The country has reportedly engaged in state-backed Bitcoin mining using its abundant hydropower resources, integrating mining activities into its national energy strategy.
Bhutan’s approach is characterized by:
State-controlled mining operations
Renewable energy-based infrastructure
Limited public promotion or political signaling
This model emphasizes quiet accumulation through production, avoiding both the volatility exposure of open market hoarding and the regulatory ambiguity of private-sector mining.
Pakistan’s Bitcoin Mining-Oriented Strategy
Background
Unlike El Salvador, Pakistan has not adopted Bitcoin as its legal tender yet. Instead, the involvement of Pakistan with Bitcoin has been characterized by a sense of caution, exploration, and strategic policymaking. Unlike El Salvador, which has adopted Bitcoin as its national currency, Pakistan has been exploring the economic potential of Bitcoin while considering the risks associated with it.
The involvement of Pakistan with Bitcoin has been primarily centered on:
Exploring the mining potential of Bitcoin as a means of generating digital money in the country
Leaning on excess energy, especially during periods of low energy usage
Handling cryptocurrencies instead of embracing them in their entirety, in order to ensure that the financial system is stable
This approach reflects Pakistan’s broader strategy of experimenting with blockchain technology while maintaining control over monetary and regulatory frameworks.
Why Mining Appeals to Pakistan
Pakistan has its own set of economic and infrastructural conditions that make Bitcoin mining an attractive strategy choice over direct asset accumulation.
The most important factors that affect Pakistan’s interest in mining are:
Increasing energy production with occasional electricity surpluses, especially in some areas and during some times of the year
A young population with expertise in technology, providing a talent pool for blockchain and cryptocurrency sectors
Increasing interest in digital currencies among the population, fueled by global trends and local entrepreneurship
Need for new sources of income, especially in the backdrop of economic difficulties
Bitcoin mining provides an opportunity to turn unused or underutilized energy resources into digital economic assets.
Key Components of Pakistan’s Mining Policy
Pakistan’s mining strategy has evolved through policy discussions and provincial initiatives rather than immediate nationwide implementation. Key elements include:
Ongoing deliberations on legal and regulatory frameworks
Proposals for designated mining zones
Collaboration with technology and blockchain communities
Exploration of public-private partnerships
A significant development occurred at the provincial level when the Khyber Pakhtunkhwa (KP) provincial government passed a resolution to legalize Bitcoin mining and establish hydro-powered mining farms. This initiative aims to use renewable hydroelectric energy to support mining activities, positioning KP as a pilot region for regulated and energy-efficient crypto mining.
This approach reflects a production-oriented mindset, where Bitcoin is treated as an industrial output rather than a reserve asset.
Advantages and Disadvantages of Bitcoin Mining
Pros:
Utilization of excess energy resources for profit-making
Creation of employment opportunities in the technology and infrastructure fields
Establishment of a local blockchain environment that fosters innovation and digital entrepreneurship
Less reliance on foreign capital inflows, as mining can produce digital assets locally
Cons:
Energy consumption levels, which may raise concerns about sustainability and resource utilization
Legislative issues, as changes in laws may impact mining activities and profitability
Environmental concerns, especially if mining is done using non-renewable energy resources
Infrastructure and investment challenges, which make large-scale mining projects financially and technically unfeasible
Pakistan’s strategy essentially embodies a production-oriented paradigm instead of accumulation, which prioritizes economic activity and technological advancements over actual asset accumulation.
Hoarding vs Mining: Strategic Differences
The contrast between El Salvador and Pakistan reveals fundamental differences in national priorities.