At this critical moment towards the superpower of Bitcoin, why are mining companies in the United States collapsing?

Author: Joel, Khalili, Wireded

Compiled by: AididiaoJP, Foresight News

Trump’s Bitcoin mining ambition

Trump once promised to make the United States the global capital of Bitcoin mining. However, the recent comprehensive tariff policy has put this ambition in a dilemma.

President Trump paused briefly to enjoy the enthusiastic applause from the audience. At the ‘Bitcoin 2024’ cryptocurrency conference, facing a group of fervent Bitcoin believers cheering, he outlined his plan to turn the United States into a superpower in Bitcoin mining.

“I want to see Bitcoin mined, minted, and produced in the United States,” he told the audience below, “You will be very pleased with me - you will be thrilled.”

Since returning to the White House, Trump has basically fulfilled his campaign promise: he has initiated the establishment of a national Bitcoin reserve, replaced the head of the regulatory agency in the previous government who was the most stringent in cracking down on encryption companies, and appointed a ‘cryptocurrency czar’ to formulate clear regulatory rules for the industry. However, in the key area of Bitcoin mining, the actions of the US president so far appear to be full of contradictions, as he supports local mining enterprises on one hand and increases industry operating costs through tariff policies on the other hand.

The dual nature of tariff policy

On April 2, Trump announced punitive new tariffs on 57 countries, including a tariff of 55% on goods from China (later adjusted) and tariffs of 24% to 36% on goods from Indonesia, Thailand, and Malaysia (Chinese companies produce a portion of mining machines in these three countries). This policy is posing a challenge to American mining companies that rely on Chinese suppliers, including the newly established mining company ‘American Bitcoin’ owned by the Trump family, due to the soaring hardware costs.

However, these tariffs have also brought a glimmer of hope: they may support small domestic mining machine manufacturers in the United States, as mining machines made in the United States are not affected 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 often sign long-term procurement agreements with hardware manufacturers. Now these companies may face a tricky issue: they may need to pay high tariffs for Chinese mining machine orders that have not yet been delivered.

Facing rising costs pressure, many American mining companies have begun to adjust their business direction, shifting towards artificial intelligence (AI) and other data center businesses to seek more stable sources of profit. This trend poses a risk to the vision of the “Bitcoin superpower,” where American companies use American-made mining machines for mining on U.S. soil, facing the risk of premature collapse at the initial stage.

“If the situation continues to develop in this way, the mining business will continue to be squeezed out of the United States,” said Chris Bendiksen, Bitcoin Research Head of investment firm CoinShares, “We may have already witnessed the peak of the mining industry in the United States.”

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 at the same time,” he said, “We can promote hardware localization through tariff policies and reduce the operating costs of Bitcoin mining companies through energy policies.”

Hardware arms race in Bitcoin mining

Bitcoin mining is essentially a hardware arms race. Mining companies must constantly upgrade their equipment to ensure that their computing power is sufficient to defeat 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 (CCA) estimates that these two companies collectively control 97% of the mining machine market share.

Despite many challengers attempting to break this duopoly in recent years, none have been able to make a breakthrough in hardware performance or production costs. ‘This road is littered with the corpses of failures,’ Bendiksen commented.

The new tariff policy forces many American mining companies that rely on Chinese mining machines to re-examine their supply chain strategies and look for alternative solutions.

Analysts believe that Auradine, a mining machine manufacturer based in Santa Clara, may be one of the biggest beneficiaries. The company, established three years ago, has struggled to challenge the market position of Bitmain and MicroBT. However, since Trump announced new tariffs, Auradine’s customer inquiries have surged.

“We see unprecedented market interest,” said Auradine co-founder and CEO Rajiv Khemani, “Miners want to ensure that 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 financing. Hemani revealed that the company is about to announce a group of high-profile customers signed after the tariff policy.

Layout of MARA Holdings

One of Auradine’s star customers is MARA Holdings, a US-listed mining company that not only participated in the founding of Auradine but also holds 85.40 million US dollars in equity in the company.

MARA CEO Fred Thiel said that although Auradine’s miners currently account for only a small part of the company’s operating equipment, in the new orders for 2025, Auradine’s products account for about 50%.

“In an environment where geopolitical risks and tariff risks coexist, if the price of U.S.-made mining machines is the same as that of Chinese-made mining machines, which one would you choose? The answer is obvious,” Til said, “If one day in the future the U.S. government suddenly bans the import of Chinese mining machines, and you have already paid a $3 billion order deposit, then 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 adding insult to injury for mining enterprises. Despite the rise in Bitcoin prices bringing some profit margins, factors such as intensified industry competition, declining transaction fees, and reduced Bitcoin block rewards have significantly compressed the profit margins of mining enterprises.

At the same time, mining companies are also facing fierce competition from AI companies, which, with sufficient financial strength, are seizing the limited energy resources in the United States. The latest forecast from the U.S. Department of Energy shows that by 2028, the electricity consumption of the AI industry may reach 22% of the total electricity consumption of all households in the United States.

Bitcoin mining companies operating in the United States, including Riot Platforms, Bitfarms, MARA, CoreWeave, Core Scientific, Hut 8, Iris Energy, etc., have all sought diversification, exiting the mining market and transforming their facilities to adapt to artificial intelligence training and high-performance computing. Only a few large companies (such as CleanSpark) still focus on Bitcoin mining.

“Miners have always been savvy power buyers, they are like vultures on the grid,” Bendiksen described, “but now, AI companies are willing to pay higher electricity prices, squeezing the survival space of mining enterprises further.”

MARA CEO Tilly believes that simply raising tariffs is not enough to force Bitcoin miners to leave the United States. Compared to energy costs, the impact of hardware import tariffs on the overall operating costs of mining enterprises is relatively small.

However, in an already challenging market environment, the cumulative effect of tariff policies undoubtedly exacerbates the industry’s predicament.

“In general, such shocks tend to lead to industry consolidation,” said Thiemo Fetzer, an economics professor at the University of Warwick. “We are likely to see small miners being phased out as the rising costs of equipment and increased supply chain uncertainty make their survival more difficult.”

Global Layout of Mining Companies

Faced with the challenges of the U.S. market, many mining enterprises have begun to expand their businesses overseas to avoid tariff risks.

Why do we need to develop international business? Because it can reduce single policy risks. As a Bitcoin miner, you must stay flexible.

At the same time, Chinese mining machine manufacturers Bitmain and MicroBT are also accelerating their layout for local production in the United States to bypass tariff barriers.

“We are actively investing in the U.S. market, including local manufacturing,” said Irene Gao, the mining business president of Bitmain.

Currently, Bitcoin mining companies are generally in a wait-and-see mode. The final impact is still uncertain before the 90-day suspension of the new tariffs by Trump ends in July, causing many companies to postpone hardware purchasing decisions.

“Everyone is watching to see how the tariff policy will finally play out,” Hamani said.

Contradictions in Trump’s policies

On the surface, Trump’s tariff policy is at odds with his ambition to promote the development of the American Bitcoin mining industry.

“These tariffs are clearly destructive,” Bendiksen bluntly commented.

To achieve both goals: supporting American mining machine manufacturers and ensuring the survival of mining companies in the United States, the Trump administration may need to use other policy tools, such as promoting energy infrastructure construction, to reduce the electricity costs of mining companies.

The White House claims that a series of recent executive orders will help reduce energy prices in the United States. However, the reality is that many mining companies are still downsizing their domestic operations and turning to AI or other fields.

‘Trump’s promise about ‘All-American Bitcoin’ seems to be just empty talk,’ Bendiksen concluded, ‘This seems more like catering to nationalist sentiment rather than real industrial policy.’