Trump Tariffs to Impact Chinese Mining Hardware Manufacturers

Trump Tariffs to Impact Chinese Mining Hardware Manufacturers


The escalating U.S. – China trade war threatens to have an adverse impact on the operations of Chinese mining equipment manufacturers, with imports of mining hardware now facing stateside tariffs of more than 25 percent.

Also Read: Former CFTC Chair Advocates ‘Tech Neutral’ Cryptocurrency Regulations 

Harsh Hardware Duties

Trump Tariffs to Impact Chinese Mining Hardware ManufacturersIn June, the Office of the United States Trade Representative reclassified Bitmain’s Antminer S9 as an “electrical machinery apparatus,” rather than a “data processing machine,” subjecting it to a 2.6 percent tariff. But in late August, the administration of U.S. President Donald Trump followed up on that decision by imposing an additional 25 percent tariff on Chinese mining hardware, bringing total tariffs on the Antminer S9 to 27.6 percent.

“All manufacturers of mining rigs based in China will likely be affected by the tariff code change and, in turn, captured by the US trade tariff,” said Ben Gagnon, the co-founder of Hong Kong-based mining hardware developer Lutech.

IPO Prospects of Mining Manufacturers
to be Impacted

Trump Tariffs to Impact Chinese Mining Hardware ManufacturersAnalysts believe the new tariffs could have a negative impact on the planned initial public offerings (IPOs) of Chinese manufacturers Canaan Creative and Ebang International in Hong Kong. In 2017, 8.5 percent of Canaan’s total revenue originated from international markets, while non-Chinese demand accounted for only 3.8 percent of Ebang’s revenue.

Bitmain, however, is believed to be the most exposed of China’s mining hardware manufacturers to the new tariffs. According to its IPO prospectus, approximately 51 percent of its sales came from outside of China in the 2016-17 period. It also said its financials could be impacted by changes to tax rates driven by “economic and political conditions.”

However, Mark Li, senior analyst at Sanford C. Bernstein, said that the company is probably more concerned about rising competition in the mining hardware market. “The U.S. tariff is probably not something on the top of the [Bitmain] management’s minds now,” Li argued.

Do you think that the new tariffs will have a detrimental impact on the operations of China’s leading manufacturers of mining hardware? Share your thoughts in the comments section below!

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Chinese Mining Hardware Manufacturers to Fall Under US Tariff Increases

Major mining hardware producers, such as Bitmain, Canaan and Ebang, could be affected by recently imposed U.S. sanctions on Chinese goods, Hong Kong’s English-language newspaper South China Morning Post (SCMP) reports Tuesday, Oct. 16.

Analysts cited by SCMP believe these tariffs could possibly affect China’s major mining hardware producers, as the technology was reclassified by the office of the United States Trade Representative (USTR) to fall under a stricter tariff regime.

This summer the Trump administration significantly increased U.S. tariffs on more than 250 Chinese goods. In June, the USTR reclassified Bitmain’s Antminer S9 as an “electrical machinery apparatus,” subjecting it to a 2.6 percent tariff. Additional tariffs were introduced in August, when fees were increased up to 25 percent on $267 billion of Chinese-made imports.

The 25 percent tariff combined with the previous regime means that mining hardware manufacturers face a 27.6 percent tariff, where previously there was zero. Ben Gagnon, the co-founder of Bitcoin (BTC) mining hardware developer LuTech, told SCMP:

“All manufacturers of mining rigs based in China will likely be affected by the tariff code change and, in turn, captured by the US trade tariff.”

SCMP states that, in 2017, overseas sales accounted for 8.5 and 3.8 percent of total revenue at Canaan and Ebang, respectively.

The new tariff regime could prove especially burdensome for Bitmain. According to its pre-Initial Public Offering (IPO) prospectus, foreign sales accounted for 51.8 percent of total revenue in 2017. Per an expert cited by SCMP, mining hardware sales accounted for 94 percent of the company’s total revenue in 2018.

On the eve of its IPO — aimed to raise anywhere from $3 billion to $18 billion — Bitmain faced some major challenges. As Cointelegraph previously reported, the hardware producer could face serious losses after investing a significant amount of its fund in Bitcoin Cash (BCH). Moreover, the company’s pre-IPO triggered numerous rumours as alleged participants, such as SoftBank and the Chinese IT-giant behind WeChat, Tencent, officially denied their participation.

Chinese Startup Cobo Raises US$13M Series A for Crypto Wallet Hardware and App

Cobo WalletCobo Wallet

Cobo, a cryptocurrency startup headquartered in Beijing, has raised US$13 million in a Series A funding round from DHVC and Wu Capital to further develop its consumer blockchain products and support the expansion of its product lines into additional markets globally.

Cobo offers two flagship consumer products: Cobo Wallet and Cobo Vault.

Reward Page, Cobo Wallet

Cobo Wallet is a multi-asset cryptocurrency software wallet that rewards users for storing Proof-of-Stake (PoS) cryptocurrencies such as Dash, Lightning Bitcoin (LBTC) and ZCoin (XZC). The “staking” feature allows users to pool their Dash, LBTC or XZC to mine cryptocurrency rewards and enjoy regular returns.

Cobo’s staking pools leverage users’ collective PoS assets to increase the combined staking capacity for a higher chance to validate transactions on blockchains utilizing the PoS consensus mechanism. Users earn PoS rewards as new blocks are validated by the staking pool.

“Crypto has come a long way since I first ventured into this space five years ago. While I’m excited to see that crypto investment and enthusiasm is on the rise globally, a majority of crypto assets remain dormant in an exchange or wallet for extended periods of time, which creates many lost opportunities,” said Changhao Jiang, co-founder and CTO of Cobo.

“As crypto becomes widely recognized as a legitimate financial instrument, our goal is to provide a rewards system that leverages unutilized assets to enrich investors and accelerate the growth of the entire crypto ecosystem.”

Besides the staking feature, Cobo Wallet supports 20+ chains including ETH, EOS, TRX, and 500+ multi-chain tokens. Users can choose to either register a cloud wallet with private keys backed up on the cloud, or generate their own HD wallet seed with private keys encrypted on their device. Cobo Wallet also features a native decentralized app (DApp) store.

The startup claims that since launching earlier this year, Cobo Wallet has attracted more than 500,000 users.

Cobo Vault

Cobo Vault

Meanwhile, Cobo Vault is a cryptocurrency hardware wallet that promises to be “the safest possible means of securing keys from hackers.”

Cobo Vault features a bank-grade encryption chip with tailored firmware that meets BIP 32, 39, and 44 protocols to ensure that the private key is stored in the encryption chip at all times. It includes a secondary level of hardware security that instantly triggers a self-destruct mechanism wiping all stored private keys and data in the event of an attempt to physically force open its body.

Cobo Vault also features web authentication to prevent supply chain attacks, firmware upgrades are done via TF card, and the device has no USB port to prevent active attacks. Transactions on Cobo Vault are conducted by scanning a dynamically changing QR code.

The device’s body boasts a 4-inch LCD display with an IP68 waterproof rating and a rugged, IK10 and MIL STD-810G certified, brushed aluminum case that can withstand a car driving over it, the company claims.

Cobo Vault will support eight of today’s top cryptocurrency including BTC, ETH and all ERC20 tokens. The development roadmap will include more coins based on community requests.

Cobo Vault retails for US$479 and is currently available for pre-order on Indiegogo.

What's in the box, Cobo Vault

What’s in the box, Cobo Vault

Cobo is the brainchild of two veteran blockchain entrepreneurs. Formerly a platform engineer at Facebook and Google, Jiang co-founded China’s first cryptocurrency wallet Bihang, which was acquired by cryptocurrency exchange OKCoin in 2013.

Cobo co-founder and CEO Shixing “Discus Fish” Ma is also the CEO and co-founder of F2Pool, China’s first mining pool and the largest multi-currency mining pool in the world today, which he launched in 2013.