Author: Tom Carreras, Source: Coindesk, Compiler: Shaw Golden Finance
Will tariffs end the golden age of Bitcoin mining in the United States?
After China banned cryptocurrencies in the summer of 2021, a large number of mining industries were forced to move to countries with low electricity costs such as Kazakhstan, Russia, and Canada. However, the biggest beneficiary of this wave of migration is the United States. In the past four years, the United States has surpassed the rest of the world in computing power (which means that the United States produces more Bitcoin than anywhere else).
However, the tariff policy announced by President Trump on April 2 (which has not yet been implemented) is likely to increase the cost of super-powerful ASIC mining machines used to produce Bitcoin. Only a few companies know how to make these ASIC mining machines, and most of their manufacturing plants are located in Southeast Asia, which face tariffs of about 10% to 50%.
Several experts said that while the new tax may not make it too expensive for American miners to import new machines, it could slow the industry's expansion in the United States.
"The United States will remain the main source of global computing power for the foreseeable future, but its absolute dominance may gradually be eroded as the bitcoin mining business becomes more global," said Taras Kulyk, CEO of bitcoin hardware company Synteq Digital.
"The growth of computing power in the United States will definitely level off relatively speaking. Other countries are entering this field in a big way. Pakistan just announced that it will provide 2,000 megawatts of power for bitcoin mining. There are also various projects going on in Ethiopia and other countries. They will definitely take a considerable share of the computing power growth."
Tariffs are just a small piece of the whole puzzle. Other factors, such as the huge demand for new data centers dedicated to artificial intelligence (AI) and the dwindling number of ideal locations in the United States for companies to set up mining facilities, may have a greater impact on miners' considerations when choosing where to operate.
In the short term, domestic operations can still take advantage of the active second-hand market to obtain mining machines without paying tariffs. But in the long term, ASIC manufacturers are taking steps to produce mining machines in the United States.
There seems to be a general consensus that tariffs, far from destroying the US bitcoin mining industry, will simply become a new variable that this fast-changing and competitive industry must deal with.
Bite the Bullet
In April, tariffs were mainly a challenge for miners because they were introduced suddenly and on a large scale. Miners and logistics companies rushed to ship ASIC chips to the United States before the policy was implemented to avoid paying the high tax, only to have the White House postpone the deadline for several months.
However, mining companies have now adapted to the current situation where the price of imported ASIC mining machines is at least 10% higher than in the past, but it is not yet certain whether this will become the new normal. The Trump administration is still engaged in trade negotiations, and the court system has not yet made a clear ruling on the legality of its new policies.
"It may take a long time to clarify what the tariffs will look like, at least until the Supreme Court makes a decision. We expect that this may take several months, or even more than a year."
Meanwhile, Luxor (which also operates a freight forwarding business) has not seen any signs of panic among its customers, but Lauren Lin said that there has been an increase in questions about how to prepare for the change in Washington's policy. Lauren Lin also said that the secondary market for ASICs (where American companies can buy second-hand, cheaper mining machines) has not shown any signs of slowing down. In other words, miners are still forging ahead.
But new difficulties are coming, such as tariffs that will also affect imported electrical hardware. For example, transformers are mostly made overseas and were already difficult to obtain before April. The tariffs will only make the situation worse. According to a person from a cryptocurrency trade organization, this is more frustrating for miners than the tariffs on ASIC miners.
In an interview, Jeff LaBerge, director of capital markets and strategic initiatives at Bitcoin miner Bitdeer, said that overall, the White House's initial tariffs on Southeast Asian countries should be seen as only the starting point of a policy that may evolve over time. "We are very optimistic that there will be a reasonable outcome in the end," he said.
Made in the United States
According to TheMinerMag, the $30 billion ASIC market is dominated by the Chinese company Bitmain, whose mining machines provide about 80% of Bitcoin's computing power. Its competitors include MicroBT, Canaan and BitDeer.
The vast majority of these companies’ ASIC miners are produced in Malaysia, Thailand and China, although MicroBT already has at least one factory in Pennsylvania, and Bitmain announced in December that it would start a new production line in the United States. Canaan has also completed a trial run in the United States, which means it now has the ability to produce ASIC miners in the United States if it wants to.
The Trump administration’s tariffs are achieving one of their stated goals (boosting the development of American industry) because they are incentivizing these ASIC manufacturers to expand their operations in the United States.
Canaan said that while production costs in the United States are higher, it has the advantage of being geographically closer to customers and reducing supply chain risks. The company said it is currently exploring the possibility of working with existing American manufacturers to meet its needs. MicroBT is also studying ways to circumvent tariffs by increasing production in the United States.
BitDeer sees this situation as an opportunity to grab market share from existing companies. "We want to move as much of our business to the United States as possible," Laberg said, "but it will take some time to gradually move forward." He added: "As a mining machine manufacturer and miner, we have great autonomy because the mining machines we produce can always find a home, whether it is in our own data centers or third parties." BitDeer has mining operations in Texas, Ohio and other places. Bitmain has not revealed any new plans to expand production in the United States since the announcement of the tariff increase in April. But Synteq's Kulyk said the company may want to prove that its production in the United States is in line with the goals of the Trump administration. Bitmain has not yet responded to this. In any case, it seems to be generally believed that expanding production capacity in the United States will be a slow and costly process. "Whether we can expand the scale of machine manufacturing in the United States depends on our ability to cut costs and the demand of American customers. If the demand of American customers is low, then there is no point in producing here," Canaan said. “Also, if tariffs on products from Southeast Asia end up being low, then we don’t necessarily need to build manufacturing capabilities in the U.S.”
The end of the golden age?
As a result, miners are quickly adapting to the new reality brought on by tariffs, and ASIC manufacturers appear ready to ramp up local production. However, it’s unlikely that the U.S. hashrate for Bitcoin, which now accounts for more than 40% of global hashrate, will continue to grow as fast as it has over the past four years.
On the one hand, tariffs do have an impact. Bitcoin mining is a highly competitive industry, and companies are always looking for ways to cut costs. If the choice is between opening a new mining facility in Texas and Ontario, tariffs could tip the decision in favor of the latter.
More importantly, however, it’s becoming increasingly difficult to find new locations in the U.S. that meet the conditions required to start a Bitcoin mining operation. “Most of the low hanging fruit in the U.S. has been hit,” LaBerge said.
Not to mention that bitcoin mining has become more competitive. Data centers dedicated to high-performance computing (HPC) are popping up across the country to boost AI capabilities, and the industry’s major players—Microsoft, Meta, Google—have deep pockets. Miners are unlikely to win a bidding war if a location is suitable for both mining and HPC.
nor would they necessarily want to. HPC data centers are more complex and capital intensive to build, but they can also be more profitable; that’s prompted many bitcoin mining companies to get involved in AI.
“HPC chasing electrons is the story for the next two to 10 years,” Kulik said. “Bitcoin miners will definitely be a target for acquisition and consolidation in the space… As an industry, they’ll likely be swallowed up or absorbed into the overall digital computing space.” ”
Due to the technical complexity required to build and run high-performance computing centers, this phenomenon is likely to be limited to the United States. Given the ongoing artificial intelligence competition between China and the United States, political factors also play a role. In other words, bitcoin miners outside the United States will not be affected by the rapid growth of the high-performance computing industry.
For American miners, the future development direction may not be to expand megawatts, but to improve efficiency, according to LaBerge.
"If you look at the global computing power right now... most mining machines have an efficiency of 30 J/TH or higher," he said. By comparison, the latest generation of mining machines from Bitmain and BitDeer have an efficiency of nearly 10 J/TH. "In today's economic situation, this can only be considered a small profit at best."
"All of these mining machine platforms need to be updated," he continued. "We think this is a potential market of $4 billion to $6 billion per year in the next three to five years."
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