Cryptocurrency mining companies in the United States are starting to experience delays in getting new equipment past customs, as officials tighten checks on shipments from Bitmain.
Beijing-based Bitmain is the leading supplier of specialized cryptominers. Now it’s deliveries to the United States have run into some scrutiny.
New York-based Bit Digital (NASDAQ: BTBT) reported a delay of a few weeks for 700 of its mining rigs. An Oklahoma-based operation has 2,000 rigs stuck in customs, according to a person familiar with the matter.
Meanwhile, Luxor Technology’s Ethan Vera noted that authorities are targeting shipments labelled with Bitmain miner branding.
A Bloomberg report warns the situation could worsen after the 10 per cent tariff on Chinese imports took effect on February 1. This increases the cost of new machines.
“U.S. Customs has started randomly inspecting almost all of the airlifted Bitcoin mining machines since about three months ago,” said Nuo Xu, founder of China Digital Mining Association.
Bitmain is facing supply chain headaches just as U.S. authorities pressure its co-founder, Zhan Ketuan, over his AI company, Sophgo. The U.S. blacklisted Sophgo in January, accusing it of aiding China’s chip industry and collaborating with Huawei.
Zhan’s shift into AI created friction within Bitmain, as some executives opposed moving focus away from mining hardware. The blacklist dealt a major blow to Sophgo, cutting it off from key suppliers like Taiwan Semiconductor Manufacturing Company.
Despite these challenges, Bitmain announced plans in December for a new U.S. facility but has kept the location undisclosed.
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Hong King market regulator will not approve blockchain IPO
Beyond being caught in the middle between a looming trade war between the US and China, there are other reasons why these are not proving to the best of times for Bitmain.
Hong Kong’s stock market regulator, HKEX, has stated that it will not approve initial public offering (IPO) applications from distributed ledger-linked firms until the region establishes a robust regulatory framework for blockchain technology and cryptocurrency.
Sources report that the regulator and operator has hinted that it will not approve Bitmain’s initial public offering. HKEX cites the blockchain industry’s premature and unregulated nature as the reason for its decision.
BTCManager reported in July 2018 that Bitmain raised USD$1 billion in its pre-IPO funding round. It was led by Tencent and SoftBank, after previously securing about USD$400 million in a round led by Sequoia Capital. Bitmain aimed to raise at least USD$3 billion before launching its IPO.
After securing significant funds, Bitmain officially filed a draft application in September to list on the Hong Kong Stock Exchange.
Meanwhile, as Bitmain focused on funding its IPO ambitions, its competitors, Canaan Inc (NASDAQ: CAN) and Ebang, actively prepared their own IPOs. Canaan set a fundraising target of $400 million, while Ebang aimed to raise USD$1 billion.
