Bitmain, the dominant producer of bitcoin mining rigs, is opening a manufacturing hub in the U.S. This smart business decision will help them avoid high tariffs and make their supply chains more nimble. The company’s change is a leading indicator of a larger trend. Towards this end, Chinese mining equipment heavyweights are already scrambling to minimize risks and address the rising security concerns within the American market.

Founded in 2013, Bitmain first made its mark by producing application-specific integrated circuit (ASIC) chips. It soon became one of the best-known companies for its Antminer rigs. Consequently, it emerged as one of the world’s three leading bitcoin mining rig producers. Bitmain, along with Canaan and MicroBT, now accounts for more than 90% of the world’s mining machine production. By 2018, Bitmain controlled more than 90% of the bitcoin mining rig market worldwide.

The move to U.S. production is part of a strategic shift to a "designed in China, made in North America" model. This strategy not only helps mitigate tariff risks, but increases the flexibility of local supply for Bitmain. North America now accounts for more than 30% of bitcoin mining worldwide. While hardware is more available, over 90% of it still comes from China, including machines manufactured by crypto giant Bitmain.

Hundreds of thousands of Chinese-made rigs, including those from Bitmain, are now plugged into the U.S. power grid. This lingering issue is posing a huge security risk. The U.S. production of Bitmain and other Chinese mining machine giants may alleviate concerns over Chinese involvement in critical tech sectors like semiconductors and energy.

Like Bitmain, both Canaan and MicroBT are setting up manufacturing bases in the U.S. as well. But fears of exposing possible new security threats will undoubtedly linger. This is the case even for Chinese-made equipment where the final assembly occurs in the U.S.