New U.S. tariffs on Chinese goods could have a major effect on China's leading producers of cryptocurrency mining hardware. These companies include Bitmain, Ebang and Canaan. This past summer, the U.S. government — under the direction of President Donald Trump — dramatically increased tariffs on in excess of 250 different types of Chinese goods, which in total have a value of nearly $270 billion. Also this summer, the office of the United States Trade Representative reclassified mining technology, and this put the hardware under an even more strict tariff. For example, the trade office determined that the Antminer S9 manufactured by Bitmain is now an "electrical machinery apparatus." This means that it is subject to a 2.6% tariff in addition to the general 25% tariff placed on Chinese goods. This brings the total tariff to 27.6%, where before this summer it was 0%. Ben Gagnon, who is the co-founder of a company that develops Bitcoin mining hardware called LuTech, said that the new tariffs will affect all producers of cryptocurrency mining hardware in China. This is important because Gagnon believes that in the past year and a half companies in the United States have significantly increased mining activities. The new tariffs could be especially burdensome for Bitmain. While Ebang and Canaan mostly produce mining hardware for the Chinese market (only 3.8% and 8.5% of their revenue, respectively, comes from foreign sales), more than 50% of Bitmain's revenue's comes from foreign sales, with nearly all the company's revenue coming from the sales of mining hardware. The company, which is in the process of filing an initial public offering (IPO), has already raised somewhere between $3 billion and $18 billion in a pre-offering. But it is facing problems that may not be limited to just U.S. tariffs. It has been reported that the company could face heavy losses due to its investment in Bitcoin Cash, and its pre-IPO has caused many rumors about major investors, which have supposedly included SoftBank, WeChat and Tencent. Though these companies have subsequently denied any involvement in the IPO.
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