Trump’s Promise to Make All Bitcoin ‘Made in the USA’ May Be His Toughest Campaign Pledge to Keep

- As Donald Trump prepares to fulfill a lengthy list of campaign promises, the president-elect’s vow to ensure that all remaining Bitcoin is “made in the USA” may prove to be one of the most challenging to keep.

Donald Trump's pledge to ensure that all remaining Bitcoin is "made in the USA" is facing challenges due to the decentralized nature of blockchains and increasing global competition in crypto mining.

Trump made the vow in a post on his Truth Social account after meeting with crypto miners at Mar-a-Lago in June. The gathering marked a shift in Trump's stance on crypto, having previously expressed skepticism.

However, industry analysts say that Trump's goal is not feasible in practice.

"It is a Trump-like comment but it is definitely not in reality," said Ethan Vera, chief operating officer at Luxor Technology, a Seattle-based company that provides software and services to miners.

Vera added that blockchains are decentralized networks in which no one controls or can be banned from participating in the process.

"On a practical basis, the sector is becoming increasingly competitive as large-scale operations pop up across the world to get a slice of the tens of billions of dollars in revenue generated each year by the industry," Vera said.

According to Vera, recent competitors include Russian oligarchs, Dubai royal families, and Chinese businessmen in Africa, who are joining in on the lucrative but energy-intensive process thanks to their deep pockets and access to vast amounts of power.

About 95% of the 21 million Bitcoin that will ever be created have already been minted, although the hard cap on production is not expected to be met for about 100 years.

The Bitcoin mining sector in the US has become a multi-billion dollar industry in recent years, as the token has seen exponential increases in prices. However, the total computing power generated from US-based miners is well below 50%, according to industry analysts.

While there is no public data to indicate the sources of computing power from each region across the world, large crypto-mining service providers such as Luxor tend to have good insight on the makeup. They have more specific information on mining locations through their software that aggregates computing power to increase chances for miners to get Bitcoin rewards.

US miners such as CleanSpark Inc. and Riot Platforms Inc. quickly supported Trump, hoping that the former president will ease scrutiny on the environmental impact of the high-energy use process, curb competition from overseas, and roll back what they view as restrictive guidelines under the Biden administration. Trump’s support of crypto helped to generate about $135 million in campaign contributions during the last election cycle, the most by any one industry.

Despite rapid expansion in the US and the latest bull run in the crypto market, economic sanctions by the US and rampant inflation in some emerging economies have spurred overseas miners to ramp up their operations even more.

“There is huge growth coming up in a few different markets,” said Taras Kulyk, chief executive of Synteq Digital, which is one of the largest brokers for specialized computers for Bitcoin mining. Eastern European countries such as Kazakhstan are seeing more demand, and “sales into Asia, Africa and the Middle East are all on the rise, Kulyk said.

Large sales in Asia point to an increase in Bitcoin mining activities in China after a sweeping ban on such operations by the government in 2021. A loosening stance on crypto from Russia is also spurring a resurgence of the industry in the country, according to Kulyk.

For some African and South American countries, margins from Bitcoin mining are much larger compared to their US peers. Pockets of cheap energy are spread across Africa with hydro power-rich Ethiopia being one of the fastest growing crypto mining hubs on the continent. The US dollar-denominated mining revenue has provided a way to keep local operators in countries like Argentina out of the inflation spiral and preserve their savings.

Even US miners have embarked on overseas expansion as power costs in states such as Texas rise. MARA Holdings Inc., the largest miner by market cap, announced plans to form a joint venture with a local firm owned by a sovereign wealth fund in Abu Dhabi. The venture aims to build out one of the largest mining farms in the Middle East.

The operations within the US are not entirely dedicated to domestic miners either. Many miners provide hosting services, in which anyone either from the US or overseas can buy machines and pay the operations to run them and earn Bitcoin.

And there is another headwind Trump risks bringing upon the US miners. A trade war with China would likely raise the cost of Bitcoin mining machines, most of which are manufactured by a Chinese company Bitmain, especially given the fact machines are one of the two major expenses for miners besides electricity. But for many miners, the benefits from Trump outweigh the harm.

“Trump is probably the best thing for Bitcoin mining that could ever happen,” Kulyk said. “He is a pro-energy and pro-economic growth type of president.”