Written by: Tom Carreras, Coindesk

Translated by: Shaw, Golden Finance

Will tariffs end the golden age of Bitcoin mining in the United States?

After China banned cryptocurrency in the summer of 2021, a large portion of the mining industry was forced to relocate to countries with low electricity costs, such as Kazakhstan, Russia, and Canada. However, the biggest beneficiary of this migration has been the United States. Over the past four years, the U.S. has surpassed all other countries in terms of computing power (which means the U.S. produces more Bitcoin than anywhere else).

However, the tariff policy announced by President Trump on April 2 (which has not yet been implemented) could potentially increase the cost of the powerful ASIC mining machines used to produce Bitcoin. Only a few companies know how to manufacture these ASIC machines, and most of their manufacturing plants are located in Southeast Asia, where they face tariffs of about 10% to 50%.

Several experts have stated that while the new taxes may not make it prohibitively expensive for U.S. miners to import new machines, they could slow the industry's expansion in the U.S.

Taras Kulyk, CEO of Bitcoin hardware company Synteq Digital, said, "In the foreseeable future, the U.S. will still be a major source of global computing power, but as Bitcoin mining becomes more globalized, the absolute dominance of the U.S. may gradually be weakened."

He added, "The growth of U.S. computing power will certainly tend to stabilize. Other countries are making significant moves in this field. Pakistan has just announced it will provide 2,000 megawatts of power for Bitcoin mining. Ethiopia and other countries also have various projects underway. They will certainly capture a significant share of the growth in computing power."

Tariffs are just a small piece of the larger puzzle. Other factors, such as the enormous demand for new data centers specifically for artificial intelligence (AI) and the decreasing number of ideal locations in the U.S. for companies to set up mining facilities, may have a greater impact on miners' location choices.

In the short term, domestic businesses in the U.S. can still take advantage of an active second-hand market to acquire mining machines without paying tariffs. However, in the long run, ASIC manufacturers are taking steps to produce machines domestically in the U.S.

There seems to be a general consensus that tariffs will not destroy the U.S. Bitcoin mining industry but will instead become a new variable that this rapidly changing and competitive industry must contend with.

Biting the Bullet

In April of this year, tariffs posed a significant challenge for miners, as they were sudden and substantial. Miners and logistics companies rushed to ship ASIC chips to the U.S. before the policy took effect to avoid high taxes, only for the White House to delay the deadline by several months.

However, mining companies have now adapted to the reality that the price of imported ASIC mining machines is at least 10% higher than in the past, though it remains uncertain whether this will become the new normal. The Trump administration is still engaged in trade negotiations, and the court system has yet to make a clear ruling on the legality of the new policy.

Lauren Lin, a director at Bitcoin hardware company Luxor Technology, stated in an interview, "It may take a long time to clarify what the tariffs will look like, at least until the Supreme Court makes a ruling. We expect this could take several months, or even over a year."

Meanwhile, Luxor (which also operates a freight forwarding business) has not seen any signs of panic among its clients, although Lauren Lin noted that there has been an increase in questions about how to prepare for changes in Washington's policies. She also mentioned that the secondary market for ASICs (where U.S. companies can purchase second-hand, cheaper mining machines) has not shown any signs of slowing down. In other words, miners are still making steady progress.

But new difficulties have arisen, such as tariffs also affecting imported electrical hardware. For example, transformers are mostly manufactured overseas and were already difficult to obtain before April. Tariffs will only exacerbate the situation. According to a cryptocurrency trade organization representative, this is more frustrating for miners than the tariffs on ASIC machines.

Jeff LaBerge, head of capital markets and strategic planning at Bitcoin miner Bitdeer, stated in an interview that overall, the initial tariffs imposed by the White House on Southeast Asian countries should only be viewed as the starting point of a policy that may evolve over time. "We are very optimistic that a reasonable outcome will ultimately be reached," he said.

Made in America

According to TheMinerMag, the $30 billion ASIC market is dominated by Chinese company Bitmain, which provides about 80% of the computing power for Bitcoin. Its competitors include MicroBT, Canaan Creative, and Bitdeer.

The vast majority of these companies' ASIC mining machines 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 launch a new production line in the U.S. Canaan Creative has also completed trial runs in the U.S., meaning it now has the capability to produce ASIC mining machines domestically if it chooses to.

The tariffs imposed by the Trump administration are achieving one of their stated goals (to promote U.S. industrial development) by incentivizing these ASIC manufacturers to expand their operations in the U.S.

Canaan Creative stated that while production costs are higher in the U.S., its advantages include being geographically closer to customers and reducing supply chain risks. The company mentioned that it is currently exploring possibilities for collaboration with existing U.S. manufacturers to meet its needs. MicroBT is also researching ways to circumvent tariffs by increasing production in the U.S.

Bitdeer views this situation as an opportunity to capture market share from existing companies. "We want to move as much of our business to the U.S. as possible," LaBerge said, "but it will take some time to gradually advance."

He added, "As a manufacturer of mining machines and miners, we have a great deal of autonomy because the machines we produce will always find a home, whether in our own data centers or with third parties." Bitdeer has mining operations in Texas, Ohio, and other locations.

Since the announcement of the tariffs in April, Bitmain has not disclosed any new plans to expand production in the U.S. However, Kulyk from Synteq indicated that the company may want to demonstrate that its production in the U.S. aligns with the goals of the Trump administration. Bitmain has not yet responded to this.

Regardless, there seems to be a general belief that expanding production capacity in the U.S. will be a slow and costly process.

"Whether we can scale up machine manufacturing in the U.S. depends on our ability to cut costs and the demand from U.S. customers. If demand from U.S. customers is low, then it doesn't make sense to produce here," Canaan Creative stated. "Additionally, if the tariffs on Southeast Asian products end up being very low, then we may not necessarily need to establish manufacturing capabilities in the U.S."

The End of the Golden Age?

Thus, miners are quickly adapting to the new reality brought about by tariffs, and ASIC manufacturers also seem prepared to increase domestic production. However, the computing power of Bitcoin in the U.S. (currently accounting for over 40% of global computing power) is unlikely to maintain the rapid growth seen in the past four years.

On one hand, tariffs will indeed have an impact. Bitcoin mining is a highly competitive industry, and companies are always looking for ways to cut costs. If given the choice between opening a new mining facility in Texas or Ontario, tariffs may sway the final decision toward the latter.

However, more importantly, it is becoming increasingly difficult to find new locations in the U.S. that meet the conditions required to start a Bitcoin mining business. "Most of the easily achievable targets in the U.S. have already been met," LaBerge said.

Not to mention that competition in Bitcoin mining has become more intense. Data centers dedicated to high-performance computing (HPC) are emerging across the country to enhance AI capabilities, and major players in the industry—Microsoft, Meta, Google—are all financially robust. If a location is suitable for both mining and high-performance computing, miners are unlikely to win in the bidding war.

They may also not be willing to do so. Building high-performance computing (HPC) data centers is more complex and requires greater financial investment, but they can also yield higher profits; this has prompted many Bitcoin mining companies to begin venturing into the AI field.

Kulyk stated, "The pursuit of electronics in high-performance computing (HPC) will be the main theme for the next two to ten years. Bitcoin miners will certainly become targets for acquisition and consolidation in this field… As an industry, they are likely to be absorbed or integrated into the overall digital computing sector."

Due to the technical complexities involved in building and operating high-performance computing centers, this phenomenon is likely to be limited to the U.S. Given the ongoing AI race between China and the U.S., political factors also play a significant role. In other words, Bitcoin miners outside the U.S. will not be affected by the rapid growth of the high-performance computing industry.

LaBerge stated that for U.S. miners, the future direction may no longer be about increasing megawatts but rather about improving efficiency.

He said, "If we look at global computing power now… most mining machines have efficiencies of 30 J/TH or higher." In contrast, the latest generation of mining machines from Bitmain and Bitdeer approaches 10 J/TH efficiency. "In today's economic climate, this can at best be considered marginally profitable."

"All of these mining machine platforms need to be updated," he continued. "We believe that in the next three to five years, this represents a potential market of $4 billion to $6 billion annually."

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