Chinese bitcoin mining equipment manufacturers Bitmain, Canaan, and MicroBT, which together control over 90% of the global mining rig market, are establishing production facilities in the United States.

This shift comes as US tariffs on Chinese imports, implemented during the Trump administration, impact the cryptocurrency supply chain. Bitmain began US production in December, while Canaan has started trial manufacturing in the country to mitigate tariff effects.

MicroBT has also announced plans to localize its operations in the US. The companies aim to lessen the impact of tariffs and address potential geopolitical concerns related to Chinese technology.

The global bitcoin mining hardware market is projected to reach an estimated US$12 billion by 2028, despite ongoing US-China tensions.

However, concerns remain about the security risks associated with Chinese-made rigs linked to US infrastructure. Chief strategy officer of US-based Auradine Sanjay Gupta noted that over 90% of mining hardware comes from China.

This is concerning, especially given that only 30% of mining activity occurs in North America.

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🔗 Source: Reuters

🧠 Food for thought

1️⃣ Global crypto hardware market faces restructuring under geopolitical pressure

The relocation of Chinese bitcoin mining hardware manufacturers to the US represents a significant shift in a market projected to grow from $10.5 billion in 2024 to US$22.63 billion by 2033 1.

This movement reflects a larger pattern of supply chain restructuring, with Chinese firms like Bitmain, Canaan, and MicroBT (controlling over 90% of global mining rig production) now establishing US operations specifically in response to tariff pressures 2.

The timing of these manufacturing shifts corresponds to US tariff announcements, with Bitmain starting US production in December following Trump’s election and Canaan beginning trial production after the April tariffs 2.

This geographic redistribution of manufacturing capability mirrors earlier patterns seen in other technology sectors during previous US-China trade tensions, where companies restructured operations to maintain market access.

The current 30% tariff imbalance (10% baseline plus 20% China-specific) has created sufficient economic pressure to force even dominant market players to reconsider their manufacturing strategies despite their first-mover advantages in developing specialized mining chips.

2️⃣ Growing concerns over technology supply chain security in critical infrastructure

The heavy reliance on Chinese-manufactured mining equipment has raised national security concerns, with some US experts describing “hundreds of thousands” of Chinese mining rigs connected to the US electrical grid as a potential security risk 2.

This security perspective mirrors concerns previously raised about other Chinese technology in US infrastructure, particularly in telecommunications where companies like Huawei faced restrictions due to perceived security threats 3.

The US cryptocurrency industry faces a significant geographic imbalance – while North America hosts over 30% of global bitcoin mining operations, more than 90% of the hardware powering these operations originates from China 2.

US companies like Auradine have begun lobbying for restrictions on Chinese mining equipment imports to stimulate domestic competition, highlighting how security concerns are influencing market dynamics beyond just tariff considerations 2.

The establishment of US production facilities by Chinese manufacturers may partially address these concerns while allowing them to maintain market dominance despite the changing regulatory landscape.

3️⃣ Bitcoin mining industry caught in broader US-China strategic competition

The restructuring of bitcoin mining hardware manufacturing represents another front in the ongoing technology competition between the US and China, extending beyond the initial cryptocurrency ban by China in 2021 2.

Despite China’s domestic cryptocurrency ban forcing miners and exchanges abroad, Chinese companies maintained dominance in hardware manufacturing through their established expertise in developing high-performance chips specifically designed for mining 2.

The US has emerged as a leading bitcoin mining location following China’s 2021 crackdown, with major mining companies like MARA, Core Scientific, CleanSpark, and Riot Platforms all based in the United States, creating a natural market for hardware manufacturers 2.

This shift has strategic implications beyond just cryptocurrency, as it connects to broader US efforts to reduce dependence on Chinese technology in various sectors and China’s parallel push to develop technological self-sufficiency 4.

The outcome of this manufacturing transition could influence not just the bitcoin mining sector but also provide insights into how other technology supply chains might evolve under similar geopolitical pressures.

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