Bitcoin miners are rushing to adapt to global tariffs introduced during the Trump administration, which are expected to raise costs on ASIC miners, electrical equipment, network infrastructure, and other essential components.
"It’s a total rush," said Ethan Vera, COO of Luxor, during a recent news roundup. "On the ASIC trading and brokerage side, miners haven’t been very proactive. They haven’t really anticipated orders or ensured they made it into the U.S. in time; they’re working on a very tight timeline, within the next week, to ensure all shipments from Southeast Asia are collected and delivered."
Recent data shows that prices for ASICs have decreased slightly over the past year. A next-generation model, such as the S21, currently costs miners around $3,400.
In a bid to expedite ASIC orders ahead of the tariffs set to take effect on April 9, leading companies arranged flights at rates 2-4 times higher than normal, costing between $2-3.5 million per flight, as reported by Taras Kulyk, CEO of Synteq Digital, and Vera.
Much of the initial anxiety stemmed from the now outdated tariff policies. Before a 90-day pause on all but Chinese tariffs announced on Wednesday, the Trump administration had suggested broad tariffs affecting over 180 countries, including 24% on Malaysia, 36% on Thailand, and 32% on Indonesia—key manufacturers of ASIC mining equipment critical to the industry.
After the grace period, the Biden administration intends to reduce the reciprocal tariffs to a flat rate of 10% for all impacted nations. Hence, the urgency among miners may have been somewhat excessive. Nevertheless, with the volatility of trade policies, it’s uncertain if the 10% rate will remain.
Even at this reduced rate, the tariffs will significantly hinder the ability to deploy hashrate in the U.S., which currently holds the largest market share at around 35-40% of Bitcoin’s hashrate. It seems that the tariffs are likely to notably slow the growth of Bitcoin’s hashrate this year compared to previous forecasts.
Estimates suggest that U.S. Bitcoin miners imported more than $2.3 billion worth of ASIC miners last year, with over $860 million in Q1, primarily from Malaysia, Thailand, and Indonesia.
Proposed Tariffs and Production Implications
Bitmain and MicroBT, which collectively dominate over 90% of the ASIC miner market, shifted their production outside of China to Malaysia, Thailand, and Indonesia in response to earlier tariffs. MicroBT established a U.S. assembly plant in 2023, while Kulyk noted that Bitmain opened its first assembly line in the U.S. in January. Nevertheless, these facilities account for only a small portion of the total output from either manufacturer.
Kulyk mentioned that "U.S. production will carry a significant premium" compared to imported hardware. However, they will still incur tariffs on raw materials such as aluminum and components for control boards. Consequently, ASICs produced in the U.S. are likely to be costlier than they were before the tariffs, especially if the proposed 125% tariff on Chinese goods goes into effect.
Vera pointed out that Chinese electrical components are expected to face a tariff of 50% or more (potentially as high as 125% based on a revised rate). This will impact prices of everything from ASICs to electrical infrastructure at mining sites.
As tariffs increase the cost of imported ASIC miners and mining equipment, existing facilities in the U.S. may become more valuable. On the other hand, miners looking to grow might find it easier to pursue acquisitions rather than importing equipment. Kulyk anticipates that the tariffs could lead to more merger and acquisition activity, noting that "older miners with outdated equipment that previously seemed irrelevant could now look appealing as acquisition targets."
Challenges Ahead for U.S. Bitcoin Miners
Currently, Kulyk remarked that there is "no market activity" as buyers hesitate, awaiting clarity on the situation. The ongoing tariffs represent a significant setback for the U.S. Bitcoin mining sector, with Vera emphasizing that this is "certainly going to curb growth in the industry if these tariffs persist."
"If you’re paying more for equipment than your competitors in Canada or Russia, it will be challenging to compete with foreign miners," he explained.
From an economic standpoint, Canada may prove to be a more appealing business environment, with notable cuts to corporate taxes and capital gains taxes on the horizon. Yet, some Canadian provinces, including Ontario and Quebec, have instituted moratoriums on new power applications for Bitcoin miners, which raises questions about Canada’s competitiveness as an alternative to the U.S.
Kulyk also noted potential for hashrate expansion in Northern Europe, while Vera suggested that miners might find opportunities in South America and certain regions of Africa.
However, growth will be constrained if miners are unable to leverage resources in the U.S., which has significantly led global hashrate expansion since China’s 2021 Bitcoin mining ban. Vera believes that the consequences of the tariffs could mirror the impact of the Chinese ban, resulting in hashrate migrating from the U.S. to other countries. Additionally, they could also lead to a considerable reduction in ASIC costs in alternative markets, as international miners won’t have to compete with U.S. miners for supplies.
"In terms of geopolitical ramifications, this situation is likely comparable to the Chinese ban," Vera stated. "International miners are expected to benefit, as they will be able to acquire machines at much lower costs without the intense demand from U.S. miners."
"There’s an argument to be made that network hashrate will continue to grow, but the U.S. has played a vital role in this expansion as a powerhouse in energy production… The power supply remains limited," Vera concluded.