Bitcoin Mining Machine Not Classifiable as Automatic Data Processor, CBP Says
A machine used for mining cryptocurrency differs from computers and other electronics classified as automatic data processing machines, CBP said in an April 30 ruling. Coinmint, which imported a Bitmain Antminer S9 Bitcoin Miner in 2016, requested a CBP ruling after the agency liquidated the entry under subheading 8543.70.99, which provides for “Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and apparatus: Other: Other: Other.” The company said the mining machine should be classified as an ADP machine.
Mining machines are used to validate transactions involving cryptocurrency, such as Bitcoin, CBP said. “The act of 'mining cryptocurrency' is the process of updating a ledger of cryptocurrency transactions known as the blockchain,” it said. “The blockchain is a series of blocks and a block is a collection of cryptocurrency transactions.” The miners “compete against other cryptominers in an attempt to guess a specific number that is associated with a block containing transaction data,” it said. “The first cryptominer to guess the correct number is rewarded by being able to authorize the transaction, update the blockchain, and receive a fraction of cryptocurrency.”
The mining machine includes parts similar to a computer, but “does not allow for general purpose computing tasks nor is it capable of displaying graphics,” CBP said. This product can't be considered “a freely programmable ADP machine” because its individual chips are “specifically written for a certain type of coin mining algorithm,” and users cannot modify the program applications, it said. The miner also can't perform general computing and lacks “sufficient memory to store and execute standard applications,” CBP said. That means it's not classifiable as an ADP machine, it said.
Coinmint also suggested it is classifiable as a unit of an ADP machine. CBP disagreed because “the Antminer S9 does not collect, convert, manipulate, or store data, nor handle information in pre-established logical sequences,” it said. “Instead, the Antminer S9 is designed, marketed, and sold for the specific purpose of generating hash numbers until the cryptographic number is solved. The function of generating numbers is a very specific function and is not a data processing function.”
“Since the function of hash calculating is not a defined function within the tariff, and the subject Antminer S9 is electrical, it is provided for in heading 8543,” CBP said. Specifically, the agency said, “the Antminer S9 is classified in subheading 8543.70.99 of the 2016, [Harmonized Tariff Schedule of the United States], which provides for 'Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and apparatus: Other: Other: Other.'” The duty rate is 2.6%.