Impact of Trump’s Tariff Policy on the US Bitcoin Mining Industry
The US Bitcoin mining industry is facing a big challenge on account of Trump’s latest tariff policy. China, the world’s largest supplier of mining equipment, is now subject to a 34% export tariff, which is able to increase the fee of mining equipment for American miners.
Background of the Tariff Policy
On April 2, Trump signed an executive order imposing reciprocal tariffs on countries which have tariffs on US goods. The base tariff rate is 10%, with some countries facing higher rates. Thailand and Malaysia, for instance, are subject to 36% and 24% tariffs, respectively. The tariffs are set to take effect on April 5, with some countries facing higher rates starting on April 9.
Immediate Effects on the Crypto Market
The announcement of the tariffs sent shockwaves through the financial markets, with the crypto sector being among the many first to react. Bitcoin (BTC) fell by 3.18% on the day of the announcement, from $85,238 to $82,526. The broader crypto market also declined, with the full crypto market cap shedding around 4% between April 2 and April 3. US-listed crypto stocks, equivalent to Coinbase Global and MicroStrategy, also declined by 7.7% and 5.6%, respectively.
Disruption to the Bitcoin Mining Industry
The tariffs pose a big challenge to the US Bitcoin mining industry, as China is the leading manufacturer of Bitcoin mining hardware. The 34% reciprocal tariff on Chinese exports to the US will increase the fee of mining equipment for American miners. This may lead to a decrease within the return on investment (ROI) for miners, making it less profitable to operate within the US.
Industry Reaction
According to Gadi Glikberg, CEO of CodeStream, the US has develop into a preferred destination for crypto mining on account of its legal, regulatory, and economic stability. However, the newly imposed tariffs may decelerate or redirect future expansion plans, as miners reassess the long-term cost-efficiency of scaling operations inside the US. Taras Kulyk, CEO of mining machine brokerage Synteq Digital, stated that his company is rushing to expedite the delivery of 1000’s of mining units from Southeast Asia before the upper duties are enforced.
Long-term Effects
Mining hardware manufacturers are preparing for a longer-term shift in operations. Bitmain Technologies, the world’s largest producer of Bitcoin mining equipment, announced plans to open a facility within the US. Another manufacturer, MicroBT, has struck a purchase order agreement with Riot Blockchain, one in all the biggest US miners, to leverage its American manufacturing presence. Investors are already pricing within the long-term effects of Trump’s tariff move, with shares of multiple US-listed mining corporations tumbling around 10% after the announcement.
Conclusion
In conclusion, Trump’s tariff policy is poised to disrupt the US Bitcoin mining industry, as China faces a steep 34% export tariff. The increase in mining equipment costs will put pressure on American miners’ ROI, making it less profitable to operate within the US. While the industry is reacting to the tariffs, it is probably going that the long-term effects might be significant, and miners might want to reassess their operations to stay profitable.
