The Unlikely Challenge of “Made in the USA” Bitcoin
As President-elect Donald Trump prepares to tackle his lengthy list of campaign promises, one vow stands out as particularly daunting: ensuring that all remaining Bitcoin is “made in the USA.” This pledge, made on his Truth Social account in June, may prove to be one of the most challenging to keep.
A Symbolic Pledge
Trump’s comment was seen as a symbolic show of support for the crypto industry, but it’s not grounded in reality. The decentralized nature of blockchains means that no single entity can control or ban participation in the process. Ethan Vera, COO at Luxor Technology, notes that it’s a “Trump-like comment, but not in reality.”
The Global Nature of Bitcoin Mining
The Bitcoin mining sector has become increasingly competitive, with large-scale operations popping up worldwide to tap into the tens of billions of dollars in revenue generated each year. Russian oligarchs, Dubai royal families, and Chinese businessmen in Africa are among the new competitors. Deep pockets and access to vast amounts of power are driving them to join the lucrative but energy-intensive process.
The State of Bitcoin Mining in the US
About 95% of the 21 million Bitcoin that will ever be created have already been minted, but the hard cap on production isn’t expected to be met for about 100 years. The US Bitcoin mining sector has grown into a multi-billion dollar industry, but the total computing power generated from US-based miners is well below 50%. It’s impossible for domestic companies to power the entire network.
US Miners’ Support for Trump
US miners such as CleanSpark Inc. and Riot Platforms Inc. were quick to support Trump, hoping he would ease scrutiny on the environmental impact of mining, curb competition from overseas, and roll back restrictive guidelines under the Biden administration. Trump’s support of crypto generated about $135 million in campaign contributions during the last election cycle.
Overseas Expansion and Competition
Despite rapid expansion in the US, economic sanctions and rampant inflation in some emerging economies have spurred overseas miners to ramp up their operations. Eastern European countries like Kazakhstan are seeing increased demand, while sales into Asia, Africa, and the Middle East are on the rise. Large sales in Asia point to an increase in Bitcoin mining activities in China after a sweeping ban in 2021.
The Rise of New Mining Hubs
Pockets of cheap energy are spread across Africa, with hydro power-rich Ethiopia being one of the fastest-growing crypto mining hubs on the continent. The US dollar-denominated mining revenue has provided a way for local operators in countries like Argentina to preserve their savings and avoid inflation.
The Challenges Ahead
Even US miners are expanding overseas as power costs in states like Texas rise. A trade war with China would likely raise the cost of Bitcoin mining machines, most of which are manufactured by Chinese company Bitmain. However, for many miners, the benefits from Trump outweigh the harm. As Taras Kulyk, CEO of Synteq Digital, notes, “Trump is probably the best thing for Bitcoin mining that could ever happen.”
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