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 Goods may presumably have an effect on China’s major mining hardware manufacturers, as the technology was reclassified by the office of the U.S. Trade Representative [USTR] to make up a stricter tariff regime.
This summer the Trump administration considerably enhanced U.S. tariffs on quite 250 Chinese products. Earlier in June, the USTR reclassified Bitmain’s Antminer S9 as an “electrical machinery equipment,” subjecting it to a 2.6% tariff. However, extra tariffs were introduced later in August, once fees were enhanced up to 25% on $267 Bln of Chinese-made imports.
The 25% tariff combined with the previous regime means that the mining hardware makers face a 27.6% tariff, wherever antecedently it was zero.
Ben Gagnon, the co-founder of Bitcoin (BTC) mining hardware developer LuTech, told SCMP:
“All makers of mining rigs primarily based in China will possibly be tormented by the tariff code amendments and, in turn, captured by the US trade tariff.”
SCMP states that, in 2017, overseas sales accounted for 8.5% and 3.8% of total revenue at Canaan and Ebang, considerably.
The new tariff regime may prove particularly onerous for Bitmain. In line with its pre IPO offering prospectus, foreign sales accounted for 51.8% of total revenue in 2017. Per an analyst cited by SCMP, mining hardware sales accounted for 94% of the company’s total revenue in 2018.
On the eve of its IPO offering that was aimed to boost money from $3 Bln to $18 Bln — Bitmain witnessed some major challenges. As par a previous report, the hardware producer may face serious losses after investing large amounts of its fund in Bitcoin Cash [BCH]. Moreover, the company’s pre-IPO triggered various rumours as alleged participants, like SoftBank along with the Chinese IT-giant behind WeChat, Tencent, formally denied their participation.