How Donald Trump’s Plan for U.S. Bitcoin Dominance Could Trigger a New Digital Gold Rush

In a bold statement that resonated across both the crypto and energy industries, former President Donald Trump recently suggested that all remaining Bitcoin should be mined in the United States. While this goal is technically unattainable due to the decentralized nature of Bitcoin mining, it does raise questions about America’s potential to dominate this burgeoning industry. According to the Cambridge Bitcoin Electricity Consumption Index, the US will account for approximately 37.8% of global Bitcoin mining by 2024. Can we push that figure above 90%?

This ambitious goal, while challenging, could reshape America’s technological and economic landscape in profound ways. Importantly, developing the American Bitcoin Mining Industry should be a bipartisan goal. Whether you lean left or right, the potential for job creation, energy innovation, and technological leadership make this an issue that should be deeply important to both Democrats and Republicans.

Transforming America’s Energy Wealth

The United States is blessed with abundant natural resources that are ideal for energy production. It has 48.3 billion barrels of proven oil reserves and 691 trillion cubic feet of natural gas, which are significant increases from previous years. The United States also has enormous potential for solar, wind, and uranium for nuclear power. However, it is important to remember that China has made significant investments to become an energy powerhouse. According to the U.S. Energy Information Administration, China’s total energy production reached 141.7 quadrillion British thermal units (Btu) in 2021, compared to the U.S.’ 95.7 quadrillion Btu.

While the US still leads in per capita energy production, China’s rapid growth and major investments in this sector underscore the urgent need to strategically reassess energy and technology policies to maintain its competitive advantage. Energy is at the core of the offshoring plans proposed by both the Biden and Trump administrations, and naturally the cheaper and more robust the energy infrastructure, the better positioned American Bitcoin miners will be in the global market.

Beyond energy considerations, Bitcoin mining is emerging as a powerful force for economic recovery in rural areas that have been hit hard by globalization and the relocation of American industry abroad. According to our research team, by 2023, U.S. Bitcoin mining operations will generate $2 billion in revenue, representing 3% of the output of the U.S. iron and steel industry. This comparison highlights the growing economic importance of this new sector. In just five years, the industry has created significant employment opportunities. According to our internal estimates, direct employment in U.S. Bitcoin mining has risen to about 1,700 jobs, doubling in the last two years. When accounting for indirect employment, PwC estimates that figure has risen to about 11,000 jobs nationwide.

The story continues

Its impact extends far beyond mining operations, with a job multiplier effect of 6.4, meaning each mining job supports an additional 6.4 jobs in the broader economy. These opportunities span a variety of sectors, including transportation, construction, plant operations, electrical engineering, and cybersecurity. As such, Bitcoin mining is not just a technological phenomenon, but a potential lifeline for communities seeking economic renewal in the wake of industrial decline.

America stands at the intersection of three distinct paths to Bitcoin mining supremacy. Each path—from aggressive dominance to free-market evolution—carries profound implications for America’s industrial future and global standing. Let’s examine these strategies and their potential to reshape America’s technological and economic landscape.

Let’s start with the “Oops, I Nuked the Competition” strategy. This approach, which sounds like it came straight out of a Hollywood blockbuster, would allow Uncle Sam to flex his military and intelligence muscles and yank every non-American Bitcoin miner out of the system faster than you can say “geopolitical disaster.” Sure, it would take over the Bitcoin market in weeks, but at the cost of triggering World War III. That’s a great plan…if your goal is to mine Bitcoin in a post-apocalyptic wasteland where bottle caps are the currency of choice. Needless to say, we’re only mentioning this option for its ridiculous value.

Neo-Keynesian Interventionism

A more realistic strategy is a government intervention approach. This approach, which could be implemented within a single presidential term, would involve recognizing Bitcoin as a strategic asset aligned with U.S. interests. Key policy changes could include eliminating the capital gains tax on Bitcoin transactions (currently 20% for long-term holdings) and mining capital, offering tax-efficient credit facilities to miners, and eliminating the 21% corporate tax rate for mining activities.

Designating Bitcoin mining as critical national infrastructure could change the U.S. approach to grid management. With their ability to quickly adjust power consumption, Bitcoin miners could act as a dynamic buffer for the power grid. During periods of peak demand, miners could quickly scale back operations and redirect power to essential services. This flexibility is particularly valuable as the U.S. integrates more intermittent renewable energy sources like wind and solar.

By offering tax incentives for participating in grid stabilization, we can make it economically attractive for miners to operate in the U.S. while also increasing the resilience of our grid. The Department of Energy estimates that data centers, including cryptocurrency mining operations, could provide up to 2 gigawatts of demand response capacity by 2030. This strategy creates a win-win scenario: grid operators gain a powerful tool for network management, while miners gain economic benefits that could increase the U.S.’s competitiveness in global Bitcoin production. Rather than aiming to increase both energy efficiency and mining output simultaneously, this approach fosters a symbiotic relationship between Bitcoin miners and the grid, potentially increasing America’s share of global mining operations while strengthening our energy infrastructure.

This approach would also prioritize energy abundance as a key national development goal. The U.S. currently spends approximately 2.3% of its GDP on energy infrastructure. By increasing this investment and focusing on high-density electricity generation, grid connection, and internet infrastructure expansion, we can create a dynamic competitive environment for Bitcoin mining.

Free Market Bitcoin

The third strategy is the free market approach. Although slower to implement and may take decades to fully materialize, this approach could have far-reaching positive effects on American welfare. It focuses on recognizing the free choice of money as a fundamental right and includes massive regulation of the electric power sector, removing energy policy barriers, and eliminating production barriers.

Consider that the average industrial electricity rate in the U.S. is currently 7.74 cents per kilowatt-hour (as of March 2024). By removing regulatory barriers and encouraging competition, we can significantly reduce this cost and make U.S.-based mining operations much more profitable than their global counterparts.

Additionally, this approach would advocate for significant reductions in capital gains, income, and corporate taxes. The current combined federal and state corporate tax rate in the U.S. is an average of 25.1%. A significant reduction could unleash a wave of investment and innovation in the Bitcoin mining sector.

By eliminating excessive taxation and regulation, we can naturally position the US as the most attractive location for Bitcoin mining globally. The sheer size of the resource and capital base, combined with the entrepreneurial spirit of the population, could increase energy abundance to unprecedented levels, making mining elsewhere economically unviable.

Intersections

The United States stands at a digital crossroads. While 100% Bitcoin mining dominance is a lofty goal, the pursuit offers a golden ticket to national renewal. Imagine revitalized rural areas filled with high-tech activity, America pioneering the world’s first truly digital commodity (after oil and gas), and an energy revolution fueling a new era of industrialization.

This isn’t just about Bitcoin; it’s about building the foundations of 21st-century economic power. By restoring critical supply chains from chips to ASIC miners, we’re not just creating jobs — we’re securing our technological independence.

Economist Noah Smith warns, “If U.S. heavy manufacturing withers and dies in the face of Chinese competition, the U.S. will not be able to add much defense production capacity in a war.” Bitcoin mining could be one key to preventing that scenario. By increasing demand for cheaper, more abundant energy, it could spark a renaissance in American manufacturing and help us preserve our industrial strength and national security.

The potential economic benefits are significant. Estimates suggest that if the US could capture 90% of the global Bitcoin mining market by 2028, it could contribute $30.6 billion to GDP – representing 1.2% of the estimated US GDP. This includes both the direct impact of $10.2 billion in Bitcoin mining revenue and an estimated $20.4 billion in indirect economic activity. Additionally, the sector could support a total of over 54,000 jobs nationwide.

The choice is clear: watch from the sidelines or lead the charge. Whether through government intervention or free-market innovation, the path America chooses will shape its energy future, technological leadership, economic destiny, and global dominance. In the race for digital supremacy, Bitcoin mining is not just an economic opportunity. It is a strategic imperative.

Note: The opinions expressed in this column are those of the author and do not reflect the opinions of CoinDesk, Inc. or its owners and affiliates.

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