US President Donald Trump’s trade war with China is having unexpected consequences for Bitcoin. Despite positive post-election signals from the crypto markets, which soared to an all-time high of $3.9 trillion, Trump’s latest moves may have some unintended effects.
The US-China trade war, which Trump restarted soon after coming to office, is having negative effects on Bitcoin. Miners, key in securing transactions, are finding it increasingly hard to get the hardware they need. As Bitcoin relies on its miners to function, the consequences for the network could be dire.
On Wednesday, February 13, Bloomberg reported increasing delays with mining equipment in the US. Industry executives claim delays are due to greater scrutiny by US border agents. This coincided with the US Department of Commerce blacklisting a Chinese chip manufacturing company, an affiliate of Bitmain.
Critically, Bitman holds 90% of the market share for Bitcoin mining rigs, which is critical for miners to compete. These graphics processing units were already subject to Trump’s 2018 tariffs, making them more costly to producers. At the same time, they will be subject to a newly announced 10% tariff on specific imports from China.
How Will The Trade War Affect Bitcoin?
Crypto mining is essential for the Bitcoin network to operate. Miners use sophisticated hardware to solve increasingly difficult equations, helping validate transactions. Without them, the network would be unable to maintain consensus and break down.
Moreover, the last halving event in April 2024 further increased mining difficulty. This difficulty makes specialized hardware essential to compete in the Bitcoin mining business. Still, Bitcoin has proven resilient, even in the face of greater problems.
In 2021, China banned crypto mining outright, prompting an exodus of miners to other countries. Notably, due to its relatively cheap energy, the US saw a boom in domestic mining. Trump even supported this move, calling for Bitcoin to be “made in the USA.”
Still, as seen after the Chinese crypto mining ban, miners are flexible. If the trade war makes operations in the US too expensive, miners will just move elsewhere.
