Investing.com -- The United States’ reliance on Chinese manufacturers for Bitcoin mining equipment has made its mining industry particularly vulnerable to trade restrictions.
According to Pat Zhang, Head of Research at WOO X, Chinese firms control between 70% and 80% of the global ASIC hardware market, meaning a 25% tariff on mining equipment would have immediate financial consequences.
This would increase the price of machines like the Antminer S19 by approximately $1,250 per unit, eroding profit margins, particularly for large-scale mining operations that require frequent hardware upgrades to stay competitive.
Beyond the direct cost increase, higher tariffs could lead to supply shortages, especially if trade restrictions escalate to include outright export bans.
While lower energy costs in certain regions of the U.S. could help miners absorb some of the additional financial burden, the overall effect would still be a slowdown in industry growth. Hardware shortages and delays would be another consequence, with the severity depending on the tariff rate.
A tariff of 10% or lower would likely have minimal impact, but at a 25% tariff, delays could extend to two to six months, slowing U.S. hashrate growth by an estimated 5% to 10%.
If tariffs rise beyond 25% and are combined with additional export restrictions, supply disruptions could stretch beyond six months, causing the U.S. share of the global Bitcoin hashrate to drop below 30% and shifting mining dominance to other countries.
Smaller and mid-sized mining firms would be hit hardest. Hardware costs typically account for 30% to 40% of a mining operation’s total expenses, and a 25% tariff could raise overall mining costs by 1%-2%.
If tariffs reach 50%-60%, costs could increase by 2%-4%, making it difficult for smaller miners to remain profitable. A 25% tariff could reduce profit margins from 37% to 25%, limiting expansion but keeping operations viable.
However, at 60%, margins could shrink to single digits, pushing some miners out of business.
As smaller miners struggle or shut down, U.S. Bitcoin mining activity would likely decline, leading to industry consolidation.
A 25% tariff could cut profit margins by 11%-15%, forcing some miners out of the market, while a 60% tariff would result in widespread closures.
Larger firms would have the resources to survive but would face slower expansion, allowing mining operations in other countries to gain market share. If tariffs remain in the 10%-15% range, only a small fraction—between 1% and 5% of the U.S. hashrate—would shift overseas.
However, a 25%-30% tariff could push 7%-17% of miners to relocate, particularly mid-sized firms unable to compete with larger U.S. operations.
If tariffs climb above 50%, the U.S. could see a mass exodus of 20%-45% of its Bitcoin hashrate, reducing its global influence in mining.
With smaller operations forced out, the remaining hashrate would likely consolidate among larger mining firms.
At tariff levels of 25%-70%, between 10% and 35% of the U.S. hashrate could end up in the hands of a few dominant players.
If mining consolidates under U.S. firms, it could raise concerns over regulatory risks, including increased government oversight and transaction censorship.
Tariffs would also impact Bitcoin’s network security. A 10%-15% tariff could reduce the U.S. hashrate by 5%-10%, lowering global hashrate by 1.8%-3.8%.
A 25%-30% tariff could shrink U.S. mining activity by 15%-25%, cutting global hashrate by up to 9.5%. If tariffs rise to 50%-70%, the U.S. hashrate could decline by 30%-50%, reducing global Bitcoin security by up to 19%.
While Bitcoin’s network is designed to be resilient, such a significant reduction in mining power could increase the likelihood of network attacks or regulatory influence.
In the long term, the U.S. Bitcoin mining industry would likely undergo significant changes. Industry consolidation would continue, with fewer but larger firms dominating the market.
The country’s share of the global hashrate would decline, and domestic ASIC manufacturing could emerge as an attempt to reduce reliance on Chinese hardware.
Miners would also seek alternative strategies, such as using second-hand equipment, shifting toward renewable energy sources, and adopting hosting models to lower costs.
Without policy adjustments, high tariffs could erode the U.S.’s position as a leading hub for Bitcoin mining, ceding ground to international competitors and reshaping the global mining landscape.