President-elect Donald Trump's promise to ensure all remaining Bitcoin is "made in the U.S." could be one of his toughest campaign promises to fulfill, Bloomberg reports
As Donald Trump prepares to fulfill a long list of campaign promises, the president-elect’s promise to ensure all remaining Bitcoin is “made in the USA” may be one of the hardest promises to keep.
Trump made the pledge in a June post on his Truth Social account after meeting with a group of crypto miners’ executives at Mar-a-Lago. Crypto miners are large, high-tech data centers that perform the work of facilitating transactions on the blockchain in exchange for compensation in cryptocurrencies. The meeting was a major turning point in Trump’s transformation from crypto skeptic to one of the industry’s strongest allies.
“It’s a Trumpian comment, but it’s absolutely not true,” said Ethan Vera, chief operating officer at Seattle-based Luxor Technology, which provides software and services to miners.
While widely seen as a symbolic pledge of support, this is nearly impossible in practice, as blockchains are decentralized networks that no one controls or can be banned from participating in the process. In practice, the industry is becoming increasingly competitive as large-scale operations pop up around the world to get a share of the tens of billions of dollars in revenue generated by the industry each year.
Russian oligarchs, Dubai royals, and Chinese businessmen in Africa are some of the newest competitors. Deep pockets and access to vast amounts of power are encouraging them to participate in the lucrative but energy-intensive process. About 95% of the 21 million Bitcoins that will ever be produced have already been minted, but the hard cap on production is not expected to be met for about 100 years.
The Bitcoin mining industry in the US has grown into a multi-billion dollar industry over the past few years, with the token seeing exponential increases in price. However, according to industry analysts, the total computing power generated by US-based miners is well below 50%, and it would be impossible for the entire network to be run by local companies.
While there is no publicly available data showing the computing power resources of every region around the world, large crypto mining service providers like Luxor tend to have a good insight into the structure. They have more specific information about mining locations through their software that aggregates computing power to increase miners’ chances of receiving Bitcoin rewards.
U.S. miners such as CleanSpark Inc. and Riot Platforms Inc. were quick to back Trump, banking on the former president easing scrutiny of the environmental impact of high-energy-use processes, blocking competition from abroad and rolling back what they see as restrictive mandates under the Biden administration. Trump’s support for crypto helped generate nearly $135 million in campaign contributions, the most from any sector in the last election cycle.
Despite rapid growth in the US and the recent bull run in the cryptocurrency market, US-imposed economic sanctions and high inflation in some emerging economies have encouraged offshore miners to further increase their activities.
“There’s been huge growth in a number of different markets,” said Taras Kulyk, CEO of Synteq Digital, one of the largest brokers of specialized computers for bitcoin mining. Kulyk said there’s greater demand in Eastern European countries like Kazakhstan, and “sales to Asia, Africa and the Middle East are all increasing.”
The big sell-off in Asia points to a surge in Bitcoin mining activity in China, following a sweeping government ban on such operations in 2021. Russia’s easing stance on crypto is also leading to a revival of the sector in the country, according to Kulyk.
For some African and South American countries, the profit margins from Bitcoin mining are much larger than their U.S. counterparts. Pockets of cheap energy are scattered across Africa, and hydropower-rich Ethiopia is one of the fastest-growing crypto mining hubs on the continent. Mining revenue in U.S. dollars has provided local operators in countries like Argentina with a way to stay out of inflation and protect their savings.
As electricity costs rise in states like Texas, even U.S. miners have begun expanding overseas. MARA Holdings Inc., the largest miner by market value, announced plans to form a joint venture with a local firm owned by a sovereign wealth fund in Abu Dhabi. The venture aims to create one of the largest mining farms in the Middle East.
Operations in the US are not entirely dedicated to local miners either. Many miners provide hosting services where anyone from the US or abroad can purchase machines and pay to run operations and earn Bitcoin.
And there’s another headwind that Trump risks bringing to U.S. miners. A trade war with China would likely increase the cost of Bitcoin mining machines, many of which are made by Bitmain, a Chinese company, especially considering that the machines are one of the two biggest expenses for miners after electricity. But for many miners, the benefits of Trump outweigh the harms.
“Trump is probably the best thing that could happen to Bitcoin mining,” Kulyk said. “He’s a pro-energy, pro-economic growth president.”
