In line with a local recent report published by SCMP [South China Morning Post], analysts cited by SCMP believe that the new regulatory laws imposed by the U.S. sanctions on Chinese Goodsmaypresumablyhave an effect onChina’s major mining hardware manufacturers,as thetechnology was reclassified by theofficeof theU.S. Trade Representative [USTR] tomake upa stricter tariff regime.
This summer the Trump administrationconsiderablyenhancedU.S. tariffs onquite250 Chineseproducts. Earlier in June, the USTR reclassified Bitmain’s Antminer S9 asan“electrical machineryequipment,” subjecting it to a2.6% tariff. However, extratariffs were introduced later in August,oncefees wereenhancedup to25%on $267 Bln of Chinese-made imports.
The25%tariff combined with the previous regimemeans that themining hardwaremakersface a27.6% tariff,whereverantecedentlyit was zero.
Ben Gagnon, the co-founder of Bitcoin (BTC) mining hardware developer LuTech, told SCMP:
“Allmakersof mining rigsprimarily basedin Chinawillpossiblybetormented bythe tariff codeamendments and, in turn, captured by theUStrade tariff.”
SCMP states that, in 2017, overseas sales accounted for8.5% and 3.8% of total revenue atCanaanand Ebang,considerably.
The new tariff regimemayproveparticularlyonerousfor Bitmain.In line withits pre IPO offering prospectus, foreign sales accounted for51.8% of total revenue in 2017. Perananalyst cited by SCMP, mining hardware sales accounted for94%of the company’s total revenue in 2018.
On the eve of itsIPO offering that was aimedto boostmoneyfrom $3 Bln to $18 Bln — Bitmainwitnessed some major challenges. Aspar a previous report, the hardware producermayface serious lossesafter investing large amountsof its fund in BitcoinCash[BCH]. Moreover, the company’s pre-IPO triggeredvariousrumours as alleged participants,likeSoftBankalong with theChinese IT-giant behind WeChat, Tencent,formallydenied their participation.