Donald Trump Administration’s New Tariffs to Potentially Impact Bitcoin Mining Profitability

On Saturday, President Trump announced significant tariffs on imported goods from Canada, Mexico, and China, heightening tensions between the U.S. and some of its biggest trading partners. These new developments may impact the profitability of Bitcoin mining centers and have led to a decline in BTC price (as a reaction to this news).

The new tariffs impose a 25% duty on imports from Canada and Mexico, though Canada’s oil and energy exports will receive a 10% exemption. Meanwhile, goods from China will be subject to a 10% tariff.

Initially scheduled to take effect on Saturday, February 1, the tariffs were delayed until Tuesday, February 4, at 12:01 a.m. These duties will be added on top of any existing tariffs and, according to the White House, are intended to curb the inflow of illegal drugs into the United States.

Are New US Tariffs Fair and Justified?

A White House fact sheet stated, “The Mexican government has provided a safe environment for cartels to manufacture and transport dangerous narcotics, which have contributed to the overdose deaths of hundreds of thousands of Americans.”

Mexico’s President Claudia Sheinbaum was quick to respond, announcing retaliatory tariffs and other measures in a post on X Saturday evening. She proposed that the U.S. and Mexico collaborate on a strategy to combat organized crime while criticizing the White House’s claim that the Mexican government cooperates with cartels. She also warned against using trade policies as a tool for addressing unrelated issues.

“I have instructed the Secretary of Economy to move forward with Plan B, which consists of tariff and non-tariff measures designed to protect Mexico’s interests,” Sheinbaum stated in a translated version of her post.

Canadian Government Looking to Impose Counter-Tariffs

The Canadian government also plans to impose counter-tariffs on American goods. Prime Minister Justin Trudeau addressed the nation on Saturday night, revealing that Canada would implement 25% tariffs on a broad range of U.S. products. 

He added that additional measures targeting the energy sector were being considered.

According to Bloomberg, Canada’s response may extend to imposing export duties on energy, which could escalate tensions further, given that Canada is the U.S.’s largest foreign supplier of energy.

This potential trade conflict could significantly impact Bitcoin mining in the U.S., where energy costs play a crucial role. Currently, the U.S. accounts for approximately 36% of the global Bitcoin hashrate, as reported by mining firm Luxor.

In other recent Bitcoin-related news, it was reported on Saturday that the number of unprocessed transactions in the Bitcoin network dropped sharply due to reduced activity, leading to multiple blocks being mined before reaching full transaction capacity.

Bitcoin Network Activity Declines

Bitcoin’s network activity hit an 11-month low in January, continuing a three-month decline, according to The Block’s data dashboard. The volume of monthly transactions has decreased by more than 43% from its peak in October 2024.

A spike in daily Bitcoin transactions was observed leading up to President Trump’s second-term inauguration but subsequently fell again. The seven-day average of daily transactions has now reached its lowest point since February 2024.

With transaction activity dwindling, Bitcoin has nearly eliminated its backlog of unconfirmed transactions, which had reached around 250,000 in late December 2024, according to Johoe’s Bitcoin Mempool Statistics.

On Saturday, several blocks were not fully filled, as transaction fees approached historic lows and mempools across different nodes cleared out.

This decline in activity presents challenges for Bitcoin miners, particularly in the wake of last year’s halving event.

Bitcoin Mining Firms Aiming to Maintain Operations 

Some major Bitcoin mining companies are now looking to diversify by shifting some of their computational resources to artificial intelligence (AI) and high-performance computing tasks.

Bitcoin’s price has remained relatively stable over the past 24 hours, hovering around $101,500.

In other Bitcoin-related updates, it is reported that a severe Arctic cold wave drove up energy prices across the southern U.S. in January, making Bitcoin mining less profitable. This led to the first downward adjustment in Bitcoin’s mining difficulty since September 2024.

Bitcoin’s mining difficulty adjusts every two weeks to ensure that blocks are mined approximately every ten minutes. When available hash power decreases, the network lowers the difficulty, making it easier for miners to find new blocks.

Over the past six months, mining difficulty has mostly risen or remained stable, except for two occasions: once on September 25, 2024, following an all-time high earlier that month, and again on January 27, 2025.

The latest adjustment was triggered by the extreme cold, which drove up natural gas demand and reduced the efficiency of renewable energy sources, increasing electricity prices. 

As a result, mining operations in the U.S. became less profitable, according to Bitcoin mining firm Luxor.

Revenue per terahash slightly declined in January compared to December, indicating that Bitcoin miners faced increased challenges in maintaining profitability.

Luxor estimates that the U.S. accounts for 36% of the global Bitcoin mining hashrate, with Texas contributing roughly 17%. 

Bitcoin Mining Firms Pivoting Towards AI

In response to rising operational costs, several major mining firms, including Riot Platforms—the nation’s largest mining facility in Rockdale, Texas—have started pivoting towards AI and high-performance computing workloads.

Luxor’s analysts predict that Bitcoin’s mining difficulty will resume its typical pattern as temperatures return to normal. “The cold weather in the U.S. is a temporary disruption, and we expect hash rate stability to improve as conditions stabilize,” they noted.