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Chinese Bitcoin Mines in the US Attract National Security Attention

Chinese-owned Bitcoin mining ventures in the U.S. are being probed for possible risks that might jeopardize national security, as reported by the New York Times (NYT).

The investigation was triggered last year after a Chinese firm started building a cryptocurrency mining center in Cheyenne, Wyoming.

Microsoft’s national security specialists flagged these issues and detailed them in an August 2022 report handed over to the U.S. Committee on Foreign Investment.

A key worry highlighted was the closeness of this facility to a Microsoft data hub that caters to the Pentagon.

Additionally, the facility was situated merely a mile away from an Air Force base responsible for nuclear-armed intercontinental ballistic missiles.

The team underscored the potential for this proximity to facilitate extensive intelligence-gathering activities by the Chinese.

Apart from espionage risks, these mining centers, filled with specialized computers inside vast warehouses or containers, exert considerable strain on the area’s electrical infrastructure.

Legal records reveal that the Cheyenne mining project has ties to five companies, all of which operate from a common Park Avenue address in Manhattan.

One of these companies is registered in the Cayman Islands and was, until last year, engaged in the pork processing sector in China.

Li Jiaming, the head of Bit Origin Ltd., which transitioned from pork processing to Bitcoin mining, denied any security risk implications.

Jiaming clarified that the location was chosen due to a power supply agreement with the local utility provider, not because of its closeness to the Microsoft data facility or the missile base.

He further stressed the critical nature of a consistent power source for their business, noting,

“Regardless of our proximity to Microsoft or the base, without electricity, our operation is non-functional.”

A Cause for Alarm

The New York Times (NYT) has pinpointed Bitcoin mining operations either owned or managed by Chinese entities in a minimum of 12 states, among them Arkansas, Ohio, Oklahoma, Tennessee, Texas, and Wyoming.

Combined, these mining sites use energy equivalent to the consumption of about 1.5 million households.

While several US mining setups seem to be clear-cut commercial endeavors, the ownership structures of others are murkier. A number of these ventures have connections leading back to the Chinese government.

Furthermore, following China’s decision in May 2021 to prohibit Bitcoin mining due to concerns about energy use and economic stability, Bitmain ramped up its equipment deliveries to the US.

Although some shipments seem unconnected to the Chinese government, import data indicates that certain consignments to the US were routed through a subsidiary situated at a location linked to the Communist Party in the southern part of China.

Additionally, the New York Times (NYT) reported that over the last five years, the company’s equipment deliveries to the US have surged by a factor of fifteen.

Chinese Bitcoin mining operations in the US have spurred grave concerns related to national security. The potential for foreign manipulation and dominance of these mines jeopardizes the safety and reliability of the entire cryptocurrency network.

Concerns aren’t just limited to security. The environmental footprint and the race for renewable energy resources also pose substantial challenges.

A fresh report from the Office of the Director of National Intelligence warns that in the face of an imminent major conflict with the US, China might be inclined to embark on aggressive cyber activities.

This analysis further highlighted that China’s cyber targets would likely focus on the US’s critical infrastructure.

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