How China’s Rare Earth Restrictions Threaten Bitcoin Mining And Crypto Markets?

China’s politics now actively includes control over rare earth exports. The country’s near-monopoly over rare earth minerals raises concerns over hardware costs, mining profitability and market volatility amidst geopolitical tensions. The newly announced restrictions will drive up costs for ASIC (Application Specific Integrated Circuit) mining equipment – the very machines that power Bitcoin’s network.

Rare earth elements play a critical role that is often overlooked in crypto mining infrastructure. Neodymium-iron-boron (NdFeB) magnets, which rely heavily on neodymium and dysprosium, are the critical components in the manufacturing of power generation equipment, cooling systems and broader semiconductor supply chain that produces ASCI mining hardware.

On 9 October 2025, China revealed new restrictions on 12 of 17 critical rare earth minerals. The list includes neodymium, dysprosium, praseodymium, holmium, erbium, thulium, europium, and ytterbium. Starting 1 December 2025, Beijing’s aggressive stance will be effective.

To add fuel to fire, US President Donald Trump threatened China with 100% tariffs over Beijing’s strict export controls on critical minerals.

This could be part of the reasons why China tightened the screws on rare earth even further.

Cryptos need chips which need rare earth. No rare earth = crypto collapse.

Russia and China will not allow the US to illegally erase its debts via crypto and stablecoins.

Game over. pic.twitter.com/qBZTh4K0Wz

— Yes, it’s me (@ElysiusThor) October 12, 2025

Beijing Tightens Control Over Materials Essential To Global Technology Supply Chains

To begin with, Bitcoin mining profitability in 2025 operates on razor-thin margins. Currently, average mining costs hover around $110,993 per Bitcoin. As of 15 October 2025, Bitcoin is trading at $112,622. Hence the cost-to-price ratio stands at around 0.96. This leaves very little room for increased operational expenses.

With control over 60-70% of global rare earth production, China controls nearly 80-90% of refining capacity worldwide.

CHINA IS SCHOOLING TRUMP:
A THREAD ON RARE EARTHS

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Beijing controls 70% of rare earth mining, 90% of processing, and 93% of permanent magnet production. pic.twitter.com/2Tgrc84BCS

— Eric 𝕏 (@WorldStrategist) October 11, 2025

X user and financial commentator Eric aka @WorldStrategist said, “Trump thought he could start a trade war and that China would accept to be bullied like the majority of countries that he has bullied unilaterally. His team didn’t think this through (clearly). Now China is schooling him and he’s holding a bad hand for the upcoming negotiations (hence his lashing out). Tacos coming soon, possibly even with dumplings.”

The general consensus is that “China is done being the nice guy.”

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A Crypto Sanctions War? China Counters EU’s Measures With Retaliatory Action

Following the European Union’s (EU) decision to impose sanctions on several Chinese entities over alleged facilitation of sanctioned cryptocurrency transactions involving Russia, Beijing has moved quickly to issue retaliatory measures of its own.

China’s Ministry of Commerce condemned the EU’s sanctions as “politically motivated” and “lacking factual basis.”

In August, China announced countermeasures against two Lithuanian financial institutions after they listed two Chinese banks in its sanctions against Russia.

According to local media reports “organizations and individuals in China are prohibited from engaging in related transactions, cooperation and other activities with the two EU financial institutions, namely UAB Urbo Bankas and AB Mano Bankas, the ministry said, citing the country’s Anti-Foreign Sanctions Law and the regulation on implementing the law.”

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Key Takeaways

Bitcoin experienced significant volatility in the wake of China’s announcement.

As the cryptocurrency market digests China’s rare earth restrictions and awaits the outcome of US-China negotiations, investors and miners face a period of elevated uncertainty.

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