MARA Holdings, a major US digital asset company and a significant investor in Auradine, supports this demand. Both companies believe that increased domestic production of mining hardware in the US would provide the country with a technological advantage and reduce reliance on China.
Bitcoin mining has become a focal point of technological competition worldwide. What was once a niche activity a few years ago is now a subject of global political and economic debate. China has not only established a b foothold in this technological race but has also achieved near-monopoly in the manufacturing of Bitcoin mining machines. The United States is now concerned about this situation, viewing it as a national security threat.
China's Dominance in Mining Machines
The hardware required for Bitcoin mining globally is extremely powerful and energy-intensive. Three major Chinese companies – Bitmain, Canaan, and MicroBT – collectively manufacture over 90 percent of these machines. These machines are exported globally, particularly to the US, Russia, and Europe in large quantities.
Although China banned domestic cryptocurrency mining and trading in 2021, machine manufacturing continues at the same scale. This has led to US companies becoming dependent on China, raising significant strategic concerns.
Chinese Companies Infiltrating the US Market
Following the imposition of a 30 percent import tariff on these machines in the US, Chinese companies have planned to begin production there. Bitmain commenced US production in December 2024. Canaan has initiated trial production, and MicroBT is preparing to start local production as well.
This move will provide these companies with tax relief and strengthen their market share in the US. Furthermore, local production would offer US consumers faster supply, although it would not eliminate dependence on China.
US Companies' Objections and National Security Concerns
Auradine, a US cryptocurrency company, has called for a ban on mining hardware originating from China. Sanjay Gupta, an official from the company, stated that millions of Chinese machines connecting to the US power grid could pose a significant cyber security risk.
According to Gupta, these machines not only process data but could potentially be controlled through code or programs enabling external interference. Given this threat, he characterized this issue as not merely a commercial matter but a political and security concern.
China's Rebuttal and a Different Perspective
Conversely, Leo Wang, an official from Canaan, dismissed these allegations, stating that mining machines are built for a single purpose: Bitcoin mining. He believes these machines pose no espionage or cyberattack threat.
Despite this, the US remains unconvinced, given China's technological expansion and presence in various sectors, which have already become a global concern. The US government has already imposed sanctions on companies like Huawei, TikTok, and Alibaba, indicating that the US views technological dominance as intrinsically linked to national security.
Shifting Equations After 2021
Until 2019, China not only manufactured mining machines but also housed the world's largest mining facilities. However, after the Chinese government adopted a stricter stance on cryptocurrencies and imposed a ban on mining in 2021, companies were forced to relocate their operations overseas.
Companies like Canaan established their headquarters in Singapore and took steps towards production in the US. This is partly because over 40 percent of Canaan's sales originate from the US. Therefore, establishing production in the US became necessary to meet the American demand.
Donald Trump and Crypto Policy
The policies of former US President Donald Trump have further politicized this issue. Trump not only increased tariffs on high-tech products from China but also presented himself as crypto-friendly. He has spoken of creating a US Bitcoin reserve and views crypto as a technology of the future.
This strategy is expected to boost the domestic mining industry while simultaneously exerting pressure on China. The US has already blacklisted Bitmain's AI unit, Sophgo, signaling the seriousness with which the US takes technological and strategic security.
