DeepSeek is planning to release a new chip for its AI software, reportedly developed and manufactured entirely in China, which could have ripple effects for cryptocurrencies and the US companies that support them.
Specifically, Trump’s trade war policies have pushed China to develop its own AI hardware solutions, which, even if the chips are inferior to Nvidia’s, could force the US company out of the entire Chinese market.
DeepSeek's New AI Chip
When DeepSeek publicly announced its LLM in January , it had a transformative impact on both the AI and cryptocurrency markets . Now, with OpenAI founder Sam Altman declaring a bubble in the market and Meta starting to downsize its AI division , we may be preparing for another disruption.
For these reasons, DeepSeek's recent announcement that it is about to release a new generation of AI chips is creating some real anxiety in the market.
According to the company's social media posts , the new chip will be entirely Chinese: designed by Chinese companies and manufactured domestically without the need for a large international supply chain .
So what does this have to do with cryptocurrencies? Unfortunately, these issues are very related. DeepSeek’s AI software has disrupted US-based competitors like OpenAI.
These indirect connections still hurt cryptocurrency prices. In the hardware space, chipmaker Nvidia is more significantly tied to the cryptocurrency market .
Currently, Nvidia's two biggest applications are AI processing and cryptocurrency mining, which is why many companies are involved in both areas at the same time.
The possibility that DeepSeek could disrupt the US AI market has already sent shares of Nvidia and mining companies tumbling , but the chip replacement is even more serious.
The fallout from Trump's trade war
Furthermore, Trump’s trade war with China may have caused this entire development, and tariffs have had a major negative impact on cryptocurrencies . According to a report released this week, Nvidia is planning to withdraw from the Chinese market altogether.
The Trump administration temporarily banned Nvidia chip exports to China , only reopening the trade after demanding new security backdoors. In response, the Chinese government has begun formally encouraging local tech companies not to use any Nvidia products, and that massive chip market could soon be closed to the US for good.
In other words, Trump's policies have encouraged DeepSeek to invent and produce AI chips that can compete directly with Nvidia's products.
If DeepSeek succeeds, Nvidia would lose a major market, which could hurt cryptocurrencies. Furthermore, an anti-crypto nation could dominate an industry that Miners around the world depend on.
All of this means that DeepSeek’s new AI chip could have very serious implications for cryptocurrencies. Even if it turns out to be a much inferior product, it could still push Nvidia out of China. However, if the chip lives up to expectations, the two companies could compete for global market dominance. Either way, it’s hard to see how these scenarios bode well for cryptocurrencies.
