The U.S. Chip Ban: A "Golden Window" for Miners and the Future of the Mining Industry

As the U.S.-China tech rivalry intensifies, the United States has once again escalated its chip ban policy, requiring that no chips be packaged in mainland China unless they are on a specific "white list." However, this white list is dominated by industries such as automotive, mobile phones, and smart devices, leaving the mining industry off the list. This policy has directly impacted the Chinese mining equipment manufacturing industry, causing supply chain disruptions, extended delivery timelines, and skyrocketing prices for mining rigs. Interestingly, this seemingly tough situation may, in fact, present unexpected benefits for miners.

The Impact of the Chip Ban on Mining Equipment: Limited Supply, Soaring Prices

Since 2022, the U.S. has gradually ramped up its chip restrictions, and the mining industry has felt the pressure. From late 2023 to early 2024, the U.S. export controls on high-performance chips led to a reduction in Chinese mining equipment shipments, significantly slowing the growth of global hash rate. According to data, from January to March 2024, global hash rate growth was only 5.2%, compared to 15.7% during the same period in 2023. The decline was particularly noticeable after Bitcoin's halving in April 2024, with global hash rate growth slowing to just 3.8% by June 2024, well below the 12.6% increase observed after the previous halving.

So why is a slower hash rate growth actually beneficial for miners? This is because Bitcoin mining difficulty is directly linked to the global hash rate. When the hash rate grows too quickly, mining difficulty increases, and miner profits decrease. However, when hash rate growth slows, the competition decreases, and miners can earn more Bitcoin per machine. This means that existing miners can continue to enjoy higher returns without needing to upgrade their hardware, lowering the risk of their equipment becoming obsolete quickly.

Rising Mining Rig Prices: "Invisible Benefits" for Miners

As the production cycle for mining rigs has lengthened, the supply of mining equipment has decreased, and prices have surged. In May 2024, the price of Bitmain’s flagship S21 series mining rigs increased by 18.5% in just one month, while the price of Canaan's M60 series rose by as much as 22%. The shortage of mining rigs has led to a surge in the second-hand market, with many miners resorting to buying used machines. This has further driven up the prices of new rigs.

For existing miners, the shortage of mining rigs has placed them at the top of the food chain. The reduction in global hash rate growth has eased competition, allowing their earnings to remain stable or even increase. The scarcity of mining rigs has, in effect, given miners a golden opportunity during this "window period," allowing them to benefit from the shortage and rising prices.

The Rebirth of China’s Mining Industry: Accelerating Domestic Production and Global Expansion

While the U.S. chip ban has dealt a major blow to China’s mining equipment industry, it doesn't signal the end of the industry. Instead, it could provide an opportunity to reshape and upgrade China’s mining equipment sector. Here are a few possible directions for the industry:

Accelerating Domestic Production
Although China’s mining industry is heavily reliant on foreign suppliers for chip design and manufacturing, the chip packaging and testing process could be the first area to break the bottleneck. Domestic testing companies such as Changdian Technology and Hua Tian Technology are already advanced in this field. While it may take time to completely replace foreign testing methods, self-reliant packaging and testing could become a feasible path in the future.

Optimizing Mining Rig Efficiency
In a market where hash rate growth is slowing, mining equipment manufacturers will focus more on improving the efficiency of their rigs. For example, Bitmain’s S21 mining rig has reduced its power consumption to 19.5 J/TH, a significant improvement over previous models. In the future, competition in the mining equipment sector will no longer just be about raw hash rate but also about lower power consumption and more stable operations, allowing miners to earn more during the limited mining window.

Global Expansion of Mining Operations
Due to the uncertainty of domestic policies, some miners have started migrating their mining operations to regions with more favorable policies, such as Kazakhstan, Russia, and the Middle East. These regions not only have lower electricity costs but also more lenient regulatory environments. In the future, Chinese mining equipment manufacturers may also set up factories and operations abroad, reducing their reliance on domestic policies.

Seizing the Opportunity: How Miners Can Benefit from the Changes

While the chip ban has disrupted mining rig production, it may offer a “golden window” for miners in the short term. With mining rig shortages and slowing hash rate growth, mining difficulty adjustments will be less aggressive, meaning miners can earn more with their existing equipment. Now is the time for miners to optimize energy efficiency, invest in more energy-efficient mining rigs, and prepare for future shifts in the mining landscape.

For mining equipment manufacturers, the chip ban could be a catalyst for industry transformation. In the long term, only those companies with strong technological innovation capabilities and supply chain integration abilities will survive and thrive.

Conclusion

The escalation of the U.S. chip ban may have caused significant short-term disruption for China’s mining equipment industry, but for miners, it could have provided an unexpected “golden opportunity.” With slower hash rate growth, less competition, and higher earnings, miners can enjoy a stable or even growing return on their investments. For China’s mining equipment industry, this is an opportunity to innovate, optimize energy efficiency, and expand globally. The mining industry is undergoing a profound transformation, and those who adapt and innovate will emerge as the leaders in the next cryptocurrency wealth cycle.