Chinese Mining Hardware Manufacturers to Fall Under US Tariff Increases
Major mining hardware producers, such as, Canaan and Ebang, could be affected by recently imposed U.S. sanctions on Chinese goods, English-language newspaper South China Morning Post (SCMP) Tuesday, Oct. 16.
Analysts cited by SCMP believe these tariffs could possibly affect China’s majorhardware 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 increasedtariffs 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 in August, when fees were increased up to 25 percent on 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 () mining hardware developer LuTech, told SCMP:
“All manufacturers of mining rigs based inwill 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 salesfor 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, the hardware producer could face serious losses after investing a significant amount of its fund in (BCH). Moreover, the company’s pre-IPO triggered numerous rumours as alleged participants, such as SoftBank and the Chinese IT-giant behind , Tencent, officially denied their participation.