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Bitcoin miners and cryptocurrency companies, whose efforts to go public in the US have previously been blocked, could become major winners in the digital asset sector if Donald Trump wins a second presidential term.
In turn, foreign companies may face the risk of losing market share.
This perspective began to gain traction among market participants after Trump increasingly supported crypto and its electoral chances increased. A CBS News poll released Thursday showed Trump with a 52% majority among likely voters for a potential rematch with President Joe Biden in November.
“There will be a winner if almost everyone in the US is willing to act under the new rules when they are implemented,” said Christian Catalini, founder of the MIT Cryptoeconomics Lab.
Following Biden's poor debate performance in June and the failed assassination attempt on Trump, Bitcoin's price rose nearly 10%. The most notable market reaction has been the rising share prices of companies that verify transactions on Bitcoin's blockchain.
In June, Trump met with Bitcoin miners and later stated on his Truth Social account that Bitcoin mining could be “our last line of defense against CBDC,” referring to a central bank digital currency. In addition, he argued that all remaining BTC should be produced in the USA.
Shares of Marathon Digital and Riot Platforms, the two major publicly traded firms, are up nearly 30% since then. According to sources, Cipher Mining is up almost 50% due to potential takeover interest.
A second Trump presidency could also make the banking system more open to crypto firms. Digital asset trading platforms are facing a shrinking number of banks willing to facilitate conversions between fiat currency and crypto assets. The collapse of crypto-friendly banks such as Silvergate and Signature has further restricted crypto firms' access to banking services.
While most industry participants will welcome a Trump victory, some companies may face difficulties. Offshore crypto firms such as Binance, OKX and Deribit, which have gained market share due to strict US regulations, may lose ground if US-based companies can offer more services under crypto-friendly management. For example, US firms may offer trading services with greater leverage or various crypto options and futures contracts.
Chinese conglomerate Bitmain, a powerful Bitcoin mining machine manufacturer, may also be negatively affected. Trump's trade rhetoric and ambition to produce all remaining Bitcoin in the US could create challenges for Bitmain, especially as US rivals such as Block and Auradine increase sales of new chips and machines to mining companies.
Trump's stance on central bank digital currency (CBDC) is another focal point. Many in the crypto community see CBDC as a tool to increase government financial oversight. Trump strengthened his pro-crypto position by promising to prevent the digitalization of the dollar.
*This is not investment advice.