Bitcoin mining operations in the United States, owned by Chinese entities, are currently under investigation for potential issues that could threaten national security, according to the New York Times (NYT). The scrutiny began last year when a Chinese company started constructing a cryptocurrency mining facility in Cheyenne, Wyoming.
Concerns Raised by National Security Experts
National security experts at Microsoft raised concerns about the Chinese-owned mining facility in their report submitted to the Committee on Foreign Investment in the United States in August 2022. One major concern cited was the proximity of the facility to a Microsoft data center serving the Pentagon. Additionally, it was located near an Air Force base overseeing nuclear-armed intercontinental ballistic missiles. The experts emphasized that this location could enable the Chinese to conduct comprehensive intelligence collection operations.
Pressure on Local Power Infrastructure
Besides intelligence concerns, these mining facilities, which consist of large warehouses or containers housing specialized computers, exert significant pressure on the local power infrastructure. Legal documents indicate that the Cheyenne mining operation is associated with five companies, all sharing the same 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.
However, Li Jiaming, the president of Bit Origin Ltd., the former pork processor turned Bitcoin miner, refuted claims of security threats. Jiaming stated that the site was selected because they had secured an agreement with the local utility company to provide power, rather than seeking proximity to the Microsoft data center or the missile base. He also emphasized the importance of a reliable power supply for the success of their business.
Widespread Presence of Chinese-Owned Bitcoin Mining Operations
The NYT has identified Chinese-owned or operated Bitcoin mining operations across at least 12 states, including Arkansas, Ohio, Oklahoma, Tennessee, Texas, and Wyoming. Collectively, these mining facilities consume as much energy as 1.5 million households. While some US mining operations appear to be straightforward ventures, the ownership of others remains obscure. Several of these operations can be traced back to the Chinese government.
In addition, after China banned Bitcoin mining in May 2021 due to concerns about energy consumption and economic stability, Bitmain increased its equipment shipments to the United States. Import records reveal that some shipments were sent to the US via a subsidiary at a site affiliated with the Communist Party in southern China. Furthermore, NYT indicated that the company’s equipment shipments to the US have increased fifteenfold in the past five years.
National Security and Environmental Impact Concerns
Chinese Bitcoin mines in the United States have raised serious national security concerns. The potential for foreign influence and control over these mining facilities poses a significant risk to the security and integrity of the cryptocurrency network. The environmental impact and competition for renewable energy sources are also pressing issues.
A recent publication from the Office of the Director of National Intelligence has cautioned that China would likely engage in assertive cyber actions in the event of a significant conflict with the United States. The report also highlighted that these actions would target critical infrastructure within the United States.
