As Trump prepares to fulfill a long list of campaign promises, the president-elect’s vow to ensure all remaining Bitcoin is “made in the USA” may become one of his most difficult to achieve.
Trump made the promise on his Truth Social account after meeting with a group of crypto mining executives at Mar-a-Lago in June. These companies have large-scale, high-tech data centers that process transactions on the blockchain in exchange for payment in Bitcoin or other cryptocurrencies. The meeting was a key turning point in Trump's transformation from a crypto skeptic to the industry's strongest supporter.
“It’s a classic Trumpian comment, but it really doesn’t tally with reality,” said Ethan Vera, chief operating officer of Luxor Technology, a Seattle-based company that provides software and services to miners. While widely seen as a symbolic statement of support, it’s virtually impossible to pull off in practice because blockchains are decentralized networks where no one person can control or prohibit others from participating. Indeed, the field is becoming increasingly competitive as large-scale operations spring up around the world to grab a share of billions of dollars in annual industry revenue. Russian oligarchs and the royal family of Dubai are some of the latest players to enter the fray. Deep pockets and access to vast amounts of electricity are driving them into the lucrative but energy-intensive process. About 95% of the 21 million bitcoins that are expected to be created have already been minted, though full production is expected to take about 100 years based on a hard cap.
Bitcoin mining in the United States has grown into a multi-billion dollar industry as the price of the token has grown exponentially over the past few years. However, according to industry analysts, the total computing power from U.S. miners is well below 50%, and domestic companies are unable to fully support the entire network.
While there is no public data on where computing power is coming from in each region, large crypto mining service providers such as Luxor tend to have a good idea of the composition of the situation. They have more specific information about mining locations because they use software that aggregates computing power to improve miners' chances of receiving bitcoin rewards.
U.S. miners such as CleanSpark Inc. and Riot Platforms Inc. quickly endorsed Trump, banking on the former president to ease scrutiny of the environmental impact of the energy-intensive process, curb overseas competition and reverse guidelines seen as restrictive under the Biden administration. Trump’s support for bitcoin helped him raise about $135 million in campaign contributions during the last election cycle, the most by any single industry.
Despite the rapid expansion of the U.S. market and the recent cryptocurrency bull run, overseas miners have further expanded their operations due to U.S. economic sanctions and inflation in some emerging economies.
“There are several different markets that are going to see huge growth,” said Taras Kulik, CEO of Synteq Digital, one of the largest bitcoin-specific computer brokers. Kulik noted that “demand is increasing in Eastern European countries like Kazakhstan, while sales are also rising in Asia, Africa and the Middle East.”
According to Kulik, Russia’s loosening attitude towards Bitcoin has also led to a resurgence in the industry in the country.
For some African and South American countries, Bitcoin mining has much greater profit margins than its U.S. counterparts. Parts of Africa have cheap energy supplies, and hydropower-rich Ethiopia is one of the fastest-growing Bitcoin mining hubs on the continent. U.S. dollar-denominated mining revenues provide local operators in countries such as Argentina with a way to avoid inflationary spirals and protect their savings.
Even U.S. miners are beginning to expand overseas as electricity costs rise in states like Texas. MARA Holdings Inc., the largest miner by market value, announced plans to form a joint venture with a local company owned by an Abu Dhabi sovereign wealth fund to build one of the largest mines in the Middle East.
Operations within the United States aren’t entirely for domestic miners, either. Many miners offer hosting services, where Americans and overseas can buy machines and pay these operators to run them and earn bitcoin.
Trump could also create another headwind for U.S. miners: The trade conflict could raise the cost of bitcoin mining machines, especially since they are one of the two main expenses for miners, besides electricity. But for many miners, Trump's benefits outweigh the harm.
Trump is probably the best thing that could happen to bitcoin mining,” Kulik said. “He’s a pro-energy, pro-growth type of president.”
