Written by: Joel Khalili, Wired
Translated by: AididiaoJP, Foresight News
Trump's Bitcoin mining ambitions
Trump had promised to make the United States the world's Bitcoin mining capital. However, the recently imposed comprehensive tariffs have put this ambition in a dilemma.
Former US President Trump paused briefly, enjoying the enthusiastic applause from the audience. At the cryptocurrency conference 'Bitcoin 2024', facing a crowd of fervent Bitcoin believers, he outlined his plan to turn the United States into a superpower in Bitcoin mining.
'I want Bitcoin to be mined, minted, and produced in America,' he said to the audience, 'You will be very satisfied with me—you will be extremely happy.'
Since returning to the White House, Trump has largely fulfilled his campaign promises: he has started building a national Bitcoin reserve, replaced the heads of regulatory bodies that were the most stringent against cryptocurrency companies in the previous administration, and appointed a 'crypto czar' to establish clear regulatory rules for the industry. However, in the critical area of Bitcoin mining, the US president's actions to date have been contradictory, as he supports local mining companies while simultaneously increasing the industry's operational costs through tariff policies.
The duality of tariff policies
On April 2, Trump announced punitive new tariffs on 57 countries, including tariffs of 55% on goods from China and 24% to 36% on imports from Indonesia, Thailand, and Malaysia (where Chinese companies produce some mining machines). This policy is presenting challenges for American mining companies reliant on Chinese suppliers, including the newly established 'American Bitcoin' mining company founded by the Trump family, as they face skyrocketing hardware costs.
However, these tariffs also bring a glimmer of hope: they may support small domestic mining machine manufacturers, as US-made mining machines are unaffected by the new import tariffs.
Whether American hardware manufacturers can truly seize this opportunity largely depends on their potential customers and whether American mining companies can withstand the economic impact of tariff policies.
To ensure supply chain stability, mining companies typically sign long-term procurement agreements with hardware manufacturers. These companies now face a tricky issue: they may need to pay high tariffs on Chinese mining machine orders that have not yet been delivered.
Faced with rising cost pressures, many American mining companies have begun to adjust their business direction, shifting to artificial intelligence (AI) and other data center businesses to seek more stable profit sources. This trend poses the risk of the vision of a 'Bitcoin superpower', where American companies mine using American-made machines on US soil, facing a premature demise.
'If this situation continues, the mining business will continue to be squeezed out of the US,' said Chris Bendiksen, head of Bitcoin research at investment firm CoinShares. 'We may have already witnessed the peak of the US mining industry.'
White House spokesperson Kush Desai refuted the claim that tariffs could undermine Trump's Bitcoin mining ambitions in a statement to WIRED magazine.
'Two things can be done simultaneously,' he said, 'We can both promote local hardware manufacturing through tariff policies and utilize energy policies to reduce the operational costs of Bitcoin mining companies.'
The hardware arms race in Bitcoin mining
Bitcoin mining is essentially a hardware arms race. Mining companies must constantly upgrade their equipment to ensure their computing power is sufficient to outpace competitors, thereby winning the right to process transaction blocks and receive Bitcoin rewards.
In this field, two Chinese manufacturers, Bitmain and MicroBT, have almost monopolized the global market. The Cambridge Centre for Alternative Finance estimates that these two companies collectively control 97% of the mining machine market share.
Despite several challengers attempting to break this duopoly in recent years, none have achieved breakthroughs in hardware performance or production costs. 'This road is littered with the corpses of failures,' Bendiksen commented.
The new tariff policy has forced many American mining companies dependent on Chinese mining machines to reassess their supply chain strategies and seek alternatives.
Analysts believe that Auradine, a mining machine manufacturer based in Santa Clara, could be one of the biggest beneficiaries. The company has struggled for three years to shake the market dominance of Bitmain and MicroBT. However, since Trump announced the new tariffs, Auradine's customer inquiries have surged.
'We are seeing unprecedented market interest,' said Rajiv Khemani, co-founder and CEO of Auradine, 'Miners want to ensure they can hedge against tariff risks in any policy environment.'
To seize this opportunity, Auradine recently launched a new generation of Bitcoin mining machine product line and raised $153 million in Series C funding. Khemani revealed that the company is about to announce a batch of high-profile clients signed after the tariff policy.
The layout of MARA Holdings
One of Auradine's star clients is MARA Holdings, a publicly listed American mining company that not only participated in Auradine's founding but also holds an equity stake of $85.4 million in the company.
MARA CEO Fred Thiel stated that although Auradine's mining machines currently account for only a small portion of the company's operating equipment, they will account for approximately 50% of new orders in 2025.
'In an environment where geopolitical risks and tariff risks coexist, if American-made mining machines are priced the same as those made in China, which would you choose? The answer is obvious,' Thiel said. 'If one day the US government suddenly bans imports of Chinese mining machines, and you have already paid a $300 million order deposit, your situation will be extremely passive.'
However, whether Auradine can truly benefit from the tariff policy still depends on whether American mining companies can withstand the impact of tariffs on their existing orders.
The current timing is particularly challenging for mining companies. Although the rise in Bitcoin prices has created some profit margin, factors such as increased industry competition, declining transaction fees, and reduced Bitcoin block rewards have significantly compressed mining companies' profit margins.
Meanwhile, mining companies are also facing fierce competition from AI companies, which, fueled by ample funding, are competing for the limited energy resources in the US. The latest forecast from the US Department of Energy shows that by 2028, electricity consumption by the AI industry could reach 22% of the total electricity consumption of American households.
Bitcoin mining companies operating in the US, including Riot Platforms, Bitfarms, MARA, CoreWeave, Core Scientific, Hut 8, and Iris Energy, are all seeking diversification, exiting the mining market, and repurposing their facilities to accommodate AI training and high-performance computing. Only a handful of large companies, like CleanSpark, still focus on Bitcoin mining.
'Miners have always been savvy electricity buyers; they are like vultures on the power grid,' Bendiksen described, 'But now, AI companies are willing to pay higher electricity prices, further squeezing the survival space for mining companies.'
MARA's CEO Thiel believes that merely raising tariffs is not enough to force Bitcoin miners out of the US. Compared to energy costs, the impact of hardware import tariffs on the overall operational costs of mining companies is relatively minor.
However, in an already challenging market environment, the cumulative effect of tariff policies undoubtedly exacerbates the industry's plight.
'Typically, such shocks lead to industry consolidation,' said Thiemo Fetzer, an economics professor at the University of Warwick. 'We are likely to see small miners being eliminated because rising equipment costs and increased supply chain uncertainty make their survival more difficult.'
The global layout of mining companies
Facing challenges in the American market, many mining companies are beginning to expand their operations overseas to avoid tariff risks.
'Why do we want to develop international business? Because it can reduce the risk of a single policy,' he said. 'As a Bitcoin miner, you must remain flexible.'
Meanwhile, Chinese mining machine manufacturers Bitmain and MicroBT are also accelerating their plans for domestic production in the US to bypass tariff barriers.
'We are actively investing in the US market, including local manufacturing,' said Irene Gao, president of Bitmain's mining business.
Currently, Bitcoin mining companies are generally in a wait-and-see mode. Before the 90-day suspension period of Trump's new tariffs ends in July, the ultimate impact remains unclear, causing many companies to delay hardware procurement decisions.
'Everyone is watching to see how the tariff policy will ultimately be implemented,' Khemani said.
The contradictions of Trump's policies
On the surface, Trump's tariff policies appear to contradict his ambition to promote the development of the US Bitcoin mining industry.
'These tariffs are clearly destructive,' Bendiksen bluntly commented.
To achieve two goals simultaneously: supporting American mining machine manufacturers while ensuring the survival of mining companies in the US, the Trump administration may need to employ other policy tools, such as promoting energy infrastructure construction to lower electricity costs for mining companies.
The White House claims that a series of recent executive orders will help lower energy prices in the US. However, the reality is that many mining companies are still scaling back domestic operations and shifting to AI or other fields.
'Trump's promise of 'National Bitcoin' currently appears to be mere empty talk,' Bendiksen summarized, 'This seems more like catering to nationalist sentiments rather than a genuine industrial policy.'
