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For years, the Beijing-based company Bitmain Technologies has dominated the Bitcoin mining business, controlling an estimated 90% of the global market for the specialized computers used to power the cryptocurrency’s decentralized network.
But now, Bloomberg reports that Bitmain’s reign is facing an “unprecedented threat” as rising political tensions and the prospect of a Donald Trump presidential comeback threaten to upend its stranglehold on the industry.
Shake-Up In US Bitcoin Mining Landscape
During his first term, Trump, a self-proclaimed crypto skeptic, has changed his heart. Now, the former president calls for Bitcoin to be “mined, minted and made” in the United States while also hinting at creating a Bitcoin Reserve for the country, casting Bitmain’s dominance as a national security risk.
This rhetoric, coupled with growing concerns that Bitmain’s equipment could be used for alleged espionage, has opened the door for Bitmain’s emerging rivals to make significant progress.
Rajiv Khemani, CEO of California-based startup Auradine and a Bitmain competitor, told Bloomberg that there are several reasons why the former president might want to challenge a scenario where there is a single dominant Chinese mining company, including national security concerns.
The shift of Bitcoin mining to the US after China’s crackdown has intensified scrutiny of who’s mining cryptocurrency on American soil and where the hardware is coming from.
US Miners Embrace Domestic Alternatives
In May, President Joe Biden ordered a Chinese mining company called MineOne to vacate and sell a property in Wyoming, citing concerns over “foreign-sourced equipment” that could enable “surveillance and espionage activities.”
While the government has not presented public evidence of Bitmain’s rigs being used for espionage, the political climate has created an opening for Bitmain’s rivals to capitalize.
California-based Auradine, for instance, raised $80 million in April and began shipping its first mining machines in late July. The company counts Marathon Digital Holdings, one of Bitmain’s largest clients, among its shareholders.
Similarly, Texas-based Core Scientific broke with tradition in July by announcing an order from a unit of Jack Dorsey’s Block – even though Bitmain is one of Core Scientific’s biggest investors.
“That’s really important for us,” said CleanSpark CEO Zach Bradford, whose company recently acquired mining facilities that had been using Bitmain equipment. “Not just for the tariffs, but with the political situation being what it is.”
Yet, despite the newfound challenges, Bitmain’s rigs remain the gold standard in the industry. “If I’m a Bitcoin miner and I need to be efficient, Bitmain has the most efficient machines,” said Patricia Trompeter, CEO of crypto miner Sphere 3D Corp.
At the time of writing, the largest cryptocurrency on the market is trading at $63,390, down 1.1% in the 24-hour time frame after briefly hitting the $65,000 mark on Sunday.
Featured image from DALL-E, chart from TradingView.com
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