From CoinShares Research Blog by Satish Patel, CFA

Dominance of Chinese Suppliers in U.S. Bitcoin Mining

Chinese suppliers, particularly Bitmain, play a critical role in the U.S. Bitcoin mining industry. With an approximate 80–90% global market share in ASIC (Application-Specific Integrated Circuit) mining hardware, Bitmain is the primary supplier for U.S. based miners. Recently, the U.S. Customs and Border Protection seized these ASICs amid speculation that they contain AI chips produced by the restricted company Sophgo, which has sparked debate as to whether this could become a deeper issue. Major U.S. mining firms, such as Marathon Digital (MARA), CleanSpark, and Iris Energy, rely heavily on Bitmain’s Antminer machines to maintain efficiency and competitiveness. The company’s dominance in the sector is reinforced by its advanced technology and supply chain network, making it an important player in global Bitcoin mining.

Bitmain’s ASIC miners are widely regarded as industry-leading in efficiency and profitability. As of February 2025, seven of the top ten most efficient Bitcoin miners are Bitmain Antminers, with the top three most profitable being the S21 Antminer models. These machines allow miners to maximise hash rates while maintaining low energy consumption, which is crucial for profitability, especially as mining difficulty continues to increase.

Tariff Risks and Rising Costs for U.S. Miners

A potential 10% tariff on Chinese exports could further strain the cost structure for U.S. miners. While many firms have pre-negotiated pricing agreements, if tariffs take effect in 2026, hardware costs could rise, making mining operations in the U.S. less competitive compared to global counterparts who can procure machines at lower prices.

Foundry Constraints and Bitmain’s Global Footprint

Bitmain’s dominance is also due to its leading position in securing foundry capacity at TSMC (Taiwan Semiconductor Manufacturing Company), which is already under pressure from AI-related demand. This constraint means alternative ASIC manufacturers may struggle to fulfill new orders quickly, causing potential bottlenecks. To mitigate geopolitical risks, Bitmain has expanded its manufacturing operations beyond China, including in Malaysia. This diversification helps maintain steady hardware supply despite potential U.S.-China trade tensions.

Alternatives for U.S. Miners if Chinese ASICs Face Restrictions

Alternative ASIC Suppliers

If U.S. miners face increased restrictions on purchasing from Bitmain or other Chinese suppliers, they have some alternatives, though each comes with limitations:

Used and Refurbished ASICs as a Short-Term Fix

Miners may turn to used or refurbished ASICs as a temporary cost-saving measure. However, this approach comes with trade-offs. Firstly, only miners with low electricity costs can remain profitable using older machines. In addition, overclocking (increasing processing speed) can boost hash rates but increases power consumption and maintenance needs.

Foundry Bottlenecks and Supply Chain Challenges

Even if U.S. miners shift to these alternatives, they still rely on TSMC and Samsung for chip production — both of which are prioritising AI-related semiconductor orders. As a result, if demand for non-Bitmain ASICs surges, it could create supply backlogs, leading to delays and higher prices. To counter these risks, Bitmain announced plans in December 2024 to establish a U.S. production facility, aiming to bypass tariffs and logistics delays, which is timely due to President Trump’s ambition to on-shore chip foundry making to the U.S. However, the location and timeline remain unclear, making it a long-term rather than an immediate solution for U.S. miners.

Risks U.S. Miners Face Without Reliable ASIC Supply

Slower U.S. Hashrate Growth

If Bitmain were banned (unlikely) or became less accessible to U.S. miners, the growth of U.S. hashrate would lag behind global competitors. Alternative ASIC suppliers, such as MicroBT and Canaan, would struggle with capacity constraints, making it difficult for U.S. miners to scale operations efficiently. Meanwhile, non-U.S. miners who can still access cheaper Bitmain machines would continue expanding their operations at a faster pace. This could lead to a decline in the U.S.’s share of the global Bitcoin network, reducing its influence over the mining industry.

Increased Hardware Costs and Profitability Challenges

If U.S. miners are forced to buy higher-cost ASICs from China due to tariffs or trade restrictions, their capital expenditure (CapEx) would rise, putting pressure on margins. At the same time, Bitcoin’s mining difficulty reached 114 trillion in February 2025, while hash prices dropped to US$53/PH/s, making it increasingly difficult for miners to remain profitable without access to efficient, low-cost hardware. In this environment, older or more expensive ASICs would struggle to break even, particularly in regions with higher electricity costs, further squeezing profitability.

Delays in equipment deliveries could disrupt mining operations, leading to extended downtime and significant revenue losses. The inability to procure new machines quickly could leave miners operating with older, less efficient ASICs, putting them at a disadvantage in a competitive industry. A slowdown in hardware upgrades would also make U.S. miners less competitive in the race to secure block rewards, reducing their ability to generate revenue efficiently.

Bitmain’s Pricing Power and Market Dynamics

If the U.S. restricted Bitmain’s sales, the company would lose access to a vital jurisdiction, potentially leading to a shift in pricing power toward non-U.S counterparties that continue purchasing its machines. This could lead to downward pressure on ASIC prices globally, benefiting non-U.S. miners while squeezing the American mining industry. As a result, U.S. miners could find themselves paying higher prices for less efficient machines, further weakening their position in the global Bitcoin mining landscape.

The Need for Diversification and Flexibility

To remain competitive, U.S. miners must diversify their hardware supply chains and adopt flexible infrastructure solutions. Mining containers, which allow for relocation based on energy costs and regulations, can provide a strategic advantage by enabling miners to shift operations to more favourable locations when necessary. Additionally, some mining firms may pivot into AI computing, utilising ASIC infrastructure for alternative high-performance computing applications, helping to offset the volatility in the Bitcoin mining sector.

Conclusion: An Uncertain Future for U.S. Bitcoin Mining

While Chinese suppliers, particularly Bitmain, continue to dominate the global Bitcoin mining sector, U.S. miners face increasing risks from supply chain constraints, tariffs, and geopolitical tensions. Without a reliable alternative, U.S. mining operations risk slower growth, higher costs, and reduced profitability. The long-term survival of the industry will depend on diversifying ASIC suppliers, securing foundry capacity, and adopting flexible mining infrastructure. If current trends continue, non-U.S. miners may gain a competitive advantage, leaving American Bitcoin mining firms at a strategic disadvantage in the years ahead.