Chinese Bitcoin mining hardware giants are closing in on U.S. markets, what are the risks?

Three Chinese firms that control more than 90% of Bitcoin mining hardware market are reportedly setting up manufacturing hubs in the U.S. as direct result of President Trump’s tariff war. According to a recent report by Reuters, the world’s top three Bitcoin ( BTC ) mining hardware manufacturers, all originating from China, are gearing up to penetrate the U.S. market. The three companies, which are Bitmain, Canaan and MicroBT, have a stronghold on 95.4% of the machinery used in global mining rigs, according to an estimation from Consultancy Frost & Sullivan in 2023 . The biggest firm of the three by sales, Bitmain, had already established U.S. production of mining rigs back in December, right after Trump’s presidential win just a month prior. Meanwhile, Canaan started its initial U.S. production foray in April, aiming to shield itself from Trump’s Liberation Day tariffs . Senior executive Leo Wang said the initiative was a necessary exploration, considering the high tariffs could lead to heavy investments. MicroBT declared in a statement that it is currently trying to implement a localization strategy in the U.S.” to “avoid the impact of tariffs”. You might also like: U.S. vs China: How Bitcoin factors into the trade wars Are U.S. Bitcoin mining rigs in trouble? The strategic move made by each firm signifies their efforts to combat the effect of Trump’s tariffs on overseas imports. By establishing manufacturing bases in the U.S., they could effectively shy away from the tariffs in place for Chinese exports. On the other hand, their presence could potentially raise alarms in the U.S. regarding security concerns held by the federal government against Chinese technology firms, as seen in previous cases involving Chinese manufactured chips and energy-related businesses. U.S. crypto-law attorney, John Deaton, said that U.S. overreliance on Chinese hardware for Bitcoin mining “creates a choke point for U.S. miners.” He said this is because China has the upper hand, in the sense that they could restrict exports or manipulate supply and “disrupt Bitcoin’s network stability and affect U.S. users and investors.” Not only that, local players in the U.S. Bitcoin mining industry have also brought up concerns about Chinese firms coming for the market in the U.S. MARA Holdings-backed U.S. mining manufacturer Auradine is one of the rival companies that are currently lobbying to restrict Chinese supplies to stimulate competition in hardware. Auradine’s chief strategy officer, Sanjay Gupta said that Chinese mining rigs pose a “security risk,” and hundreds of thousands of them are plugged into the U.S. electrical grid. “While over 30% of global Bitcoin mining occurs in North America, more than 90% of mining hardware originates from China representing a major imbalance of geographic demand and supply,” said Gupta. According to the report, China used to dominate the entirety of the Bitcoin supply chain, from rig-making to mining to BTC trading. All of that changed after the Chinese government banned cryptocurrency in 2021 due to financial security reasons. As a result, many Chinese miners, traders and exchanges set up operations abroad. For example, Canaan moved its headquarters to Singapore, though it still has Chinese operations. You might also like: Trump’s tariffs threaten U.S. Bitcoin mining as China hit with 34% export duty