In a significant shift within the cryptocurrency sector, three of China’s largest Bitcoin hardware manufacturers are establishing production operations in the United States. This move comes as President Donald Trump’s tariff policies continue to reshape the industry landscape.
The companies in question—Bitmain, Canaan, and MicroBT—hold a commanding position, controlling over 90% of the global mining rig market. These industry giants are integral to the Bitcoin ecosystem, producing the specialized ASIC (Application-Specific Integrated Circuit) machines that serve as the foundation for the world’s leading cryptocurrency network. It can be said that nearly every Bitcoin mined globally is processed using hardware that showcases Chinese engineering.
95% Market Control Sparks “Digital Dependency Trap” and Security Risks
A report by Reuters from June 18 indicates that the Bitcoin mining powerhouses are setting up U.S. operations to sidestep potential tariffs. However, this escalation has prompted security concerns regarding Chinese involvement in crucial sectors such as semiconductor manufacturing and energy infrastructure.
Guang Yang, chief technology officer at Conflux Network, emphasized that the implications of this situation extend beyond mere trade policy. Yang stated, “The U.S.-China trade war goes beyond tariffs; it’s a strategic pivot toward ‘politically acceptable’ hardware sources.”
Bitmain, recognized as the largest of the trio by revenue, began its U.S. production of mining equipment shortly after Trump’s election victory in December. Meanwhile, Canaan initiated trial production on April 2 to circumvent tariffs following Trump’s announcement of new trade measures.
One of the largest manufacturers of #bitcoin mining machines, Canaan, has set up a base of operations outside of China.
CEO Zhang says, Kazakhstan is essential to “expanding after-sales geographical coverage and providing […] support for a growing international customer base” pic.twitter.com/7D5Xh2ici5
— Documenting ₿itcoin (@DocumentingBTC) June 23, 2021
MicroBT, ranked third in the market, declared it is “actively implementing a localization strategy in the U.S.” as a means to “avoid the impact of tariffs.”
$11.9B by 2028: The Market These Giants Are Fighting for
According to a report from Frost & Sullivan titled “2024 Global Blockchain Hardware Industry White Paper,” the market for ASIC-based Bitcoin mining hardware is undergoing considerable consolidation. The three Chinese manufacturers together control a staggering 95.4% of the market share in terms of computing power sold.
The Bitcoin ecosystem consists of five key segments: hardware supply, mining farm operations, mining pool management, trading platforms, and payment processing services. Companies like Canaan, recognized as the first Bitcoin mining firm to go public and the second-largest by computing power, specialize exclusively in integrated circuit (IC) design, manufacturing, and equipment sales.
Industry analysts foresee continued expansion, with the market projected to reach $11.9 billion by 2028. This growth corresponds to a compound annual growth rate of 15.3%, driven largely by the rising price of Bitcoin due to scarcity in supply.
Source: Frost & Sullivan
China’s Historical Bitcoin Mining Advantage
To understand the current migration of operations, one must examine how China secured such unparalleled market control. This dominance was established during the landmark Bitcoin boom of 2017 when three critical factors converged to boost Chinese mining capabilities.
During the early stages of expansion, Chinese officials recognized the potential profitability of cryptocurrency mining, attracting considerable foreign investment. As a result, authorities initially turned a blind eye to the mining sector while implementing restrictions on Bitcoin trading and initial coin offerings.
Hydro-power plants go on sale in China since #Bitcoin mining crackdown has reduced demand for electricity.
– South China Morning Post pic.twitter.com/QKEbUzWN4g
— Bitcoin Archive (@BTC_Archive) June 30, 2021
The extensive hydroelectric resources in China further reinforced the country’s mining operations, providing the affordable energy necessary for lucrative Bitcoin production.
Does Chinese Hardware Control America’s Bitcoin Network?
Despite the United States leading global Bitcoin mining activities with over 38% of total network operations, American miners are heavily reliant on equipment manufactured in China. This dependency has raised alarms among security analysts, who describe it as a “digital dependency trap.” This situation underscores a reliance on hardware produced by a primary economic rival.
Guang Yang of Conflux Network contextualizes this dependence within a broader geopolitical framework that goes beyond trade economics. “The U.S.-China trade war goes beyond tariffs,” Yang explained, highlighting the strategic shift toward ‘politically acceptable’ hardware sources.
This perspective reflects mounting concerns within the cryptocurrency community regarding supply chain vulnerabilities that could pose risks to national economic security.
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