Chinese Bitcoin Mines in the U.S. Raise National Security Concerns
Chinese bitcoin mines located in the United States have raised concerns about national security, according to a report by The New York Times. One such mine is situated next to a Microsoft data center that supports the Pentagon and near an Air Force nuclear missile base in Cheyenne, Wyoming.
The proximity of these mines could potentially enable the Chinese to conduct intelligence collection operations. The Microsoft team had previously expressed their concerns about this to a U.S. government committee.
Anonymous U.S. officials revealed that they have been monitoring the Wyoming facility for months and have taken measures to mitigate any potential intelligence threats.
A company called Bit Origin, which is linked to the Cheyenne mine, stated that it has responded to inquiries from the U.S. federal committee. Li Jiaming, the president of Bit Origin, explained that the site was chosen because they secured an agreement with the local utility company for power supply, not because of its proximity to the Microsoft data center or missile base.
Many of these mines were established after China banned bitcoin mining in 2021. According to The New York Times, several of these mines have ties to the Chinese Communist Party or state-owned entities hidden behind layers of shell companies.
The China Connection
The New York Times identified Chinese-owned or operated bitcoin mines in at least 12 states, including Arkansas, Ohio, Oklahoma, Tennessee, Texas, and Wyoming.
Despite legislation in various U.S. states that restricts Chinese land ownership due to security concerns, Texas has become a significant hotspot for bitcoin mining operations with Chinese connections. The Lone Star Infrastructure Protection Act prohibits businesses owned by foreign adversaries from accessing critical infrastructure but Chinese-tied bitcoin mining operations continue to thrive due to lucrative state incentives.
Experts have expressed concerns about the strain these mining operations could place on the grid if they were to work together. Brian Harrell, a former assistant secretary for infrastructure protection at the Department of Homeland Security, warned that the mines are operating in a “gray area.” Howard Gugel, a VP at NERC, the U.S. grid regulator, echoed this sentiment.
A recent report from the Office of the Director of National Intelligence also highlighted the possibility of China launching aggressive cyber operations against critical infrastructure in the event of a major conflict with the U.S.
Many of these facilities use bitcoin mining machines from Bitmain, a leading Chinese manufacturer. While Bitmain has no direct connection to Chinese authorities, some of its exports to the U.S. are routed through Hainan Bitmain Technologies, a subsidiary with an address listed at a Communist Party guesthouse in Hainan.
Since China’s ban on bitcoin mining in 2021, Bitmain has shipped 15 times more machines to the U.S. than in the previous five years combined.
Bitmain has not yet responded to a request for comment from The Block.
Hot Take: Chinese Bitcoin Mines in the U.S. Raise Concerns About National Security
The presence of Chinese bitcoin mines in the United States has sparked worries about national security. These mines, located near critical infrastructure such as data centers and missile bases, raise concerns about potential intelligence collection operations by China. Despite legislation restricting Chinese land ownership in some states due to security concerns, Chinese-tied bitcoin mining operations continue to thrive, particularly in Texas. Experts warn that these operations could strain the power grid and operate in a “gray area.” The Office of the Director of National Intelligence also warns of aggressive cyber operations against critical infrastructure by China. These mines often use machines from Bitmain, a leading Chinese manufacturer. The situation raises questions about the potential risks and implications of Chinese involvement in the U.S. bitcoin mining industry.
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