Today, China announced that it will increase tariffs on the goods it ships to the United States from 34% to 84% in response to President Trump stating that he will raise tariffs on the goods the U.S. ships to China to 104%.
The increased Chinese tariffs on the U.S. will make it more costly for U.S.-based public Bitcoin mining companies to purchase ASICs (the premier machines used to mine bitcoin), the majority of which are produced in China.
And this will be largely beneficial for the health of the Bitcoin mining ecosystem.
As Troy Cross eloquently explained in “The Future OF Bitcoin Mining Is Distributed”, if one country controls too much of the Bitcoin hashrate, Bitcoin’s censorship resistance — one of its core value propositions — is put at risk.
In the article, Cross highlighted that if the majority of the Bitcoin network’s hashrate is not only produced in the U.S. but produced by American public mining companies, the U.S. government has more leverage to mandate that these companies only mine OFAC-compliant blocks.
For those who believe that these companies would push back or simply not follow such orders, please note that Marathon Digital Holdings, the largest publicly-traded Bitcoin mining company in the U.S., has already proven that it’s willing to comply with OFAC regulations.
The Bitcoin network has a higher likelihood of maintaining its censorship resistance when the hashrate is distributed globally.
As Cross mentioned in a recent interview (below), Bitcoin differs from other emerging technologies in that it does not benefit from one country controlling most of the industry around it.
He acknowledges that this isn’t necessarily intuitive, and that the notion may be confusing to the likes of those who are behind President Trump when he declares that he wants “all bitcoin made in the U.S.A.”
With the Bitcoin network, it’s best for countries to control a sizable portion of the network but not more than 50% of it.
And as Cross mentioned in the interview above, he believes that the U.S. may already control more than 50% of the hashrate.
However, this trend may now begin to reverse in the wake of China’s tariff increase on the U.S., because it will now be cheaper for the competitors of public U.S.-based Bitcoin miners to obtain ASICs than it will be for these companies.
So, while the escalating tariff war may be incredibly anxiety-inducing on a number of levels, consider taking some solace in the fact that it may be good for Bitcoin.
