## U.S. Customs to Release Seized Mining Equipment from Chinese Sellers, Marking a Shift in the Crypto Landscape
In November 2023, U.S. Customs and the Federal Communications Commission (FCC) took action by seizing Bitcoin mining equipment, citing concerns that the chips contained restricted technology from the Chinese chip manufacturer Sophgo. Initially, U.S. Customs and the FCC suggested that the chips might have caused radio interference, which many viewed as a pretext for targeting Chinese technology. Ethan Vera, COO of Luxor Technology, noted that while some equipment has been released, a significant amount remains in custody. Most of the seized machines are owned by Sophgo, a Chinese company.
The U.S. government alleges that Sophgo was covertly collaborating with Huawei, a company on the U.S. blacklist, which they claim justified the seizure due to the challenges in clearing the equipment. However, Sophgo has denied any business relationship with Huawei. One affected company reported that it is now facing a holding fee for its seized machines, which include 200 ASICs, resulting in a bill of $200,000. In total, approximately 10,000 mining machines were confiscated at various U.S. ports, with some retailers estimating their equipment’s value at around $5 million. Interestingly, some Chinese ASICs managed to evade seizure and continue to reach American retailers.
These seizures pose a challenge to President Trump’s ambition of establishing America as the global hub for cryptocurrency. The disruption in mining equipment availability could potentially limit the Bitcoin hashrate and hinder the growth of the cryptocurrency market. President Trump has been a strong advocate for Bitcoin mining in the U.S., expressing his desire for the remaining Bitcoin to be mined domestically.
The U.S. Department of Commerce’s Bureau of Industry and Security is tasked with formulating strategies to address Chinese mining operations. They have implemented regulations concerning advanced semiconductors, particularly in the realms of crypto and AI, aiming to curb Chinese advancements. However, a significant hurdle remains: China supplies about 98% of all chips utilized in crypto mining.
Bitmain, the largest manufacturer, has expanded its operations in the U.S., primarily focusing on enhancing delivery speeds. The company has publicly expressed confidence in its progress and its potential benefits for American industry partners. Despite the high percentage of chips produced in China, around 38% of Bitcoin’s hashrate is generated in the U.S., indicating that the success of the crypto sector relies on collaboration between American and Chinese entities.
Nevertheless, the U.S. and China find themselves in a trade war, with America striving for supremacy in AI and military capabilities. While the U.S. holds an edge in chip design, China excels in manufacturing and is making significant strides in research and development. Huawei, a prominent player in the AI sector, continues to be a focal point in this complex landscape.
