Investigations are currently underway regarding Bitcoin mining operations in the United States, controlled by Chinese entities. These inquiries have raised red flags concerning potential threats to national security, as reported by The New York Times (NYT).
The origin of this scrutiny dates back to the prior year when a Chinese corporation embarked on the construction of a cryptocurrency mining facility in Cheyenne, Wyoming.
Security experts with a focus on national security from Microsoft initiated these investigations. They later detailed their findings in an extensive report. This report was submitted to the Committee on Foreign Investment in the United States in August 2022.
One of the paramount issues that garnered attention was the close proximity of this facility to a Microsoft data center that serves the Pentagon.
Furthermore, it was positioned about a mile away from an Air Force base. This base oversees intercontinental ballistic missiles, including those armed with nuclear warheads. The team emphasized that this strategic location could offer the Chinese an opportunity to conduct extensive intelligence gathering operations.
Chinese Bitcoin Mining Operations: Power Supply, Locations, and Security Denials
Apart from the intelligence-related concerns, these mining facilities are worth noting. They consist of extensive warehouses or specialized computer-housing containers. These exert significant strain on the local power infrastructure.
Legal documentation reveals that the mining operation in Cheyenne is affiliated with five companies, all sharing a common office address on Park Avenue in Manhattan.
One of these entities is registered in the Cayman Islands and was previously involved in the Chinese pork processing industry until the preceding year.
Nonetheless, Li Jiaming, the President of Bit Origin Ltd., the company that transitioned from pork processing to Bitcoin mining, staunchly denied any allegations of posing security threats.
Jiaming asserted that the site was chosen primarily because they had secured an agreement with the local utility provider to ensure a reliable power supply, as opposed to prioritizing proximity to the Microsoft data center or missile base.
He emphasized that for their operations to thrive, a dependable power source was imperative, stating, “Even though our location is in close proximity to Microsoft and a few miles from the base, without an uninterrupted power supply, our business wouldn’t be sustainable.”
Chinese Bitcoin Mining in the U.S.: Security, Energy, and National Concerns
The NYT has found Chinese-owned or operated Bitcoin mining operations in at least 12 states. These include Arkansas, Ohio, Oklahoma, Tennessee, Texas, and Wyoming.
Collectively, these mining facilities consume an amount of energy equivalent to that used by 1.5 million households.
While certain U.S. mining operations may appear to be straightforward business endeavors, the ownership of others remains shrouded in secrecy. Several of these operations can be traced back to the Chinese government.
Furthermore, following the Chinese ban on Bitcoin mining in May 2021 due to concerns related to energy consumption and economic stability, Bitmain significantly increased its equipment shipments to the United States.
Although it may seem unrelated to the Chinese government, import records tell a different story. They show that specific shipments were directed to the U.S. through a subsidiary. This subsidiary has connections to the Communist Party in southern China.
Moreover, the NYT has reported a fifteenfold increase in the company’s equipment shipments to the U.S. over the past five years.
Chinese Bitcoin mining facilities within the United States have raised profound apprehensions about national security. Foreign influence and control over these mining centers pose a significant risk to the cryptocurrency network’s security and integrity.
Moreover, the environmental ramifications and competition for renewable energy sources have become pressing concerns.
A recent publication from the Office of the Director of National Intelligence has issued a caution. It suggests that in the event of a significant conflict with the United States, China might consider aggressive cyber actions. The report also emphasizes that these actions would specifically target critical infrastructure within the United States.