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The ban on cryptocurrencies in China and the exclusion of mining from the country allowed the United States to take the lead in the export of mining rigs.
There was a time when China dominated the production of mining rigs. In 2008, Beijing-based Bitmain produced 84% of the world’s bitcoin mining equipment.
But the ban on crypto last September and the subsequent order to completely stop mining in the country have undermined the export of mining rigs from China and shifted the balance of power in favor of the United States.
In October 2021, the National Development and Reform Council (NDRC) stepped up the ban on cryptocurrencies in China by adding cryptomining to the country’s industrial blacklist.
The ban caused a massive exodus of mining rig manufacturers from China, depriving the country of an edge in a trade war over semiconductor exports. The U.S. currently dominates the mining hardware market and is projected to maintain the lead until 2027.
In addition, the United States has surpassed China in terms of bitcoin mining. Major players, including Bitmain, have reduced orders for semiconductors from Taiwanese company (TSMC) by $300 million, and are currently shifting production from China.
The outflow of mining and mining hardware manufacturers could negatively impact China’s trade as the global crypto mining hardware market is expected to increase by more than $2.8 billion between 2020 and the end of this year.
China is losing ground
According to the East Asia Forum, most mining rig manufacturers are expected to move to the United States, which offers better infrastructure for integrated circuits and is geographically closer to both manufacturers and those who will buy and use them.
The forum report notes that China is in fact a major semiconductor importer, as its domestic chipmaker SMIC can only produce N+1 nodes, which are unsuitable for use in cryptocurrency mining rigs.
“Even if China had not imposed a mining ban, its dominance as an exporter of mining rigs could not be taken for granted as the US could have restricted TSMC’s sales in China.”
“Under the Trump and Biden administrations, TSMC has readily divested Huawei, its second-largest customer, and suspended orders from several Chinese supercomputer companies,” the report says.
Loyalty goes beyond business and politics
The Taiwanese semiconductor company’s loyalty to the United States goes beyond business and politics. The report added that the company’s equipment and intellectual property are mainly imported from US or US-related companies such as Applied Materials.
Despite the ban, a new study in the journal Joule found that China has failed to cut carbon emissions.
In fact, the suppression of the mining industry in China has led to an increase in carbon emissions. – after all, when the miners left the country, they also abandoned the environmentally friendly hydroelectric power plant.
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