US officials flag national-security concerns over Chinese mining firms

Chinese mining companies based in the United States are raising concerns about national security. The New York Times (NYT) citing U.S. government officials.

Many cryptocurrency mining operations have relocated to the United States after ban on this activity in China in 2021. According to the NYT, some of them have ties to the КПК or state-owned enterprises.

One of the sites drawing concern was a facility adjacent to a Microsoft data center and not far from a military base in Cheyenne, Wyoming. In a report to the Committee on Foreign Investment in the United States in August 2022, the corporation’s team said that such a location “could enable the Chinese to conduct intelligence-gathering operations”.

Anonymous sources in the U.S. government told the NYT that they had tracked the Wyoming site “for several months” and “took steps to mitigate any potential intelligence threat”.

Bit Origin is linked to the town — in June 2022 the firm объявила investments in a mining site in Cheyenne. In a statement to the publication its representatives said they had answered the Committee’s inquiries. According to the miner’s president, Li Jiamin, the site was chosen after signing an agreement with a local electricity supplier, and not because of proximity to Microsoft or a missile base.

However, Bit Origin has no direct ties to the Chinese government, unlike YZY Capital Holdings. Journalists say the firm is allegedly controlled by a member of the Communist Party and businessman Yuan Qian and bought a parcel next to the Microsoft data center.

The outlet also identified mining companies owned or controlled by China in at least 12 states, including Arkansas, Ohio, Oklahoma, Tennessee and Texas.

The authorities in the latter state, the piece notes, are particularly welcoming toward industry participants. Local law, however, bars foreign-owned entities from accessing critical infrastructure. Still, the media notes, China-linked firms continue to operate.

The NYT also added that many sites are equipped with devices from Bitmain. Although the manufacturer has no direct ties to the Chinese authorities, part of its exports to the United States are handled through a subsidiary, Hainan Bitmain Technologies. Journalists say its address in Wanning, Hainan, is linked to the CCP. The company’s spokesperson said this information is outdated.

In 2021, reports said that amid crackdowns by Chinese authorities on the crypto industry, a Guangzhou will move to the United States a batch of Bitcoin-mining devices weighing 3,000 kg.

Earlier, Miami Mayor Francis Suarez spoke of plans to attract Chinese miners to the city, granting them access to nuclear energy.

In May 2023, the Biden administration proposed including in the federal budget a 30% tax on electricity used for cryptocurrency mining.

Marathon Digital CEO Fred Thiel predicted a migration of miners to offshore jurisdictions.