For years, China’s Bitmain Technologies Ltd. has reigned supreme in the world of Bitcoin mining, controlling a staggering 90% of the global market for specialized computers, known as rigs, used to mine the cryptocurrency. Bitmain’s dominance in this lucrative sector has been likened to the monopoly once held by De Beers in the diamond industry, with the power to dictate global prices by adjusting its output. However, the political landscape is shifting, and with it, the future of Bitmain’s rule is in jeopardy.
Former U.S. President Donald Trump, known for his hardline stance on China, has introduced a new dynamic into the Bitcoin mining industry. Trump, who has transformed from a crypto skeptic to a champion of the industry, has called for Bitcoin to be “mined, minted, and made” in the United States. His rhetoric comes at a time of escalating geopolitical tensions between the U.S. and China, creating a fertile ground for American competitors to challenge Bitmain’s supremacy.
The political environment in the U.S. is becoming increasingly hostile to Chinese companies, particularly those involved in technology and critical infrastructure. Concerns about national security are rising, with fears that equipment made by Chinese firms like Bitmain could be used for espionage. “There are many reasons why Trump may want to challenge a scenario where there’s a single dominant company that is a Chinese company in this space,” said Rajiv Khemani, CEO of Auradine, a California-based startup rivaling Bitmain. “National security concerns are certainly among them.”
This new dynamic is already influencing the market. In July, Core Scientific Inc., a Bitcoin mining company based in Austin, Texas, announced an order from a unit of Jack Dorsey’s Block Inc., despite Bitmain being one of its major investors. Auradine, which raised $80 million in April and shipped its first mining machines in late July, counts Marathon Digital Holdings Inc., one of Bitmain’s largest clients, among its shareholders.
Bitmain has responded to the threat of U.S. tariffs by shifting some of its production from China to Southeast Asia. The company now operates production lines in Indonesia, Malaysia, and Thailand, according to Taras Kulyk, CEO of Synteq Digital, a distributor of Bitmain equipment. However, these moves may not be sufficient to protect Bitmain from the growing competition and geopolitical tensions.
The shift of Bitcoin mining to the U.S. after China banned the practice has coincided with intensified U.S. efforts to prevent China from obtaining advanced computing equipment. This battle for technological supremacy has disrupted global supply chains and led to increased scrutiny of the origins of cryptocurrency mining equipment used on U.S. soil.
In May, President Joe Biden ordered Chinese Bitcoin mining company Mineone to vacate and sell a 12-acre property near Cheyenne, Wyoming. The Committee on Foreign Investment in the United States (CFIUS) cited concerns that the “specialized and foreign-sourced equipment” used by Mineone could facilitate surveillance and espionage activities. The rigs in question were largely supplied by Bitmain.
This heightened scrutiny is affecting companies that rely on Bitmain’s equipment. For instance, Cleanspark Inc., which calls itself “America’s Bitcoin Miner,” agreed to purchase mining rigs from Bitmain Technologies Delaware Ltd. on the condition that all equipment must be manufactured outside of China or any Office of Foreign Assets Control (OFAC)-sanctioned nations. The contract also allows Cleanspark to reject any products found to originate from China, reflecting the growing importance of supply chain transparency in the industry.
Despite these challenges, Bitmain continues to be a significant player in the global Bitcoin mining market. However, the rise of American competitors, coupled with the potential return of Trump to the White House, poses a serious threat to the company’s dominance. As Trump declared at a Bitcoin conference in July, “If we don’t do it, China is going to figure it out, and China’s going to have it—or somebody else.”
Bitmain’s future in the U.S. market remains uncertain as the company navigates the turbulent waters of geopolitics and technological competition. Whether it can maintain its grip on the Bitcoin mining industry in the face of rising American nationalism and regulatory scrutiny is a question that only time will answer.
