DeepSeek is planning to release a new chip for AI software, purportedly developed and manufactured entirely within China. This could have cascading implications for crypto and the US firms that bolster it.
Specifically, Trump’s trade war policies pushed China to develop independent AI hardware solutions. Even if this chip is inferior to Nvidia’s, it could still force the US firm out of the entire Chinese market.
DeepSeek’s New AI Chip
When DeepSeek publicly released its LLM in January, it had a transformative impact on both the AI and crypto markets. Now that OpenAI founder Sam Altman declared a bubble in the market and Meta began downsizing its AI division, we may be ripe for another disruption.
For these reasons, DeepSeek’s recent announcement that it’s about to release a new next-gen AI chip is creating some real market anxiety.
According to the firm’s social media posts, this new chip will be fully Chinese: designed by Chinese firms and manufactured domestically without massive international supply chains.
Still, what does this have to do with crypto? Unfortunately, these issues are extremely relevant. DeepSeek’s AI software disrupted US-based competitors like OpenAI.
These tangential connections still hurt crypto prices. In the hardware sector, though, the chip manufacturer Nvidia is significantly more entangled with crypto markets.
At the moment, Nvidia’s two largest use cases are for AI processing and crypto mining, which is why several firms engage in both enterprises simultaneously.
The mere possibility that DeepSeek could disrupt the US AI market tanked Nvidia and miner stocks, but a chip replacement is even more dire.
Blowback from Trump’s Trade War
Moreover, Trump’s trade war with China arguably caused this entire development process, and tariffs have a major negative impact on crypto. According to a report released this week, Nvidia is planning to completely withdraw from the Chinese market.
Trump’s administration briefly banned Nvidia chips from export to China, and only reopened the trade after mandating new security backdoors. In response, the Chinese government began formally discouraging local tech firms from using any Nvidia products, and this massive chip market may soon close to the US forever.
In other words, Trump’s policies encouraged DeepSeek to invent and manufacture AI chips that can directly compete with Nvidia products.
If DeepSeek succeeds, Nvidia will lose a major market, possibly hurting crypto. Furthermore, an anti-crypto nation might dominate the industry that miners worldwide depend on.
All that is to say, DeepSeek’s new AI chip could have very serious ramifications for crypto. Even if it’s a vastly inferior product, it could still push Nvidia out of China. If this chip lives up to the hype, however, the two firms might compete for market dominance worldwide. Either way, it’s hard to see how these scenarios could be bullish for crypto.
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