Is the U.S. investigating China's Bitmain Mining Rig on national security grounds?

In the wave of the global digital economy, Bitcoin mining has transformed into a massive industry that impacts geopolitical issues, energy consumption, and national security. Recently, a federal investigation code-named “Operation Red Sunset” has brought the world's largest Bitcoin mining rig manufacturer—Bitmain Technologies Ltd., based in Beijing, China—into the spotlight. The U.S. government is conducting an in-depth review of the mining equipment (ASIC Mining Rig) it produces, citing national security concerns, worried that these devices scattered across the United States could potentially become tools for espionage and even pose a threat to the nation’s critical infrastructure.

Red Sunset Operation

According to anonymous American officials and informed sources, the investigation led by the Department of Homeland Security (DHS) has been ongoing for several months. The core objective of the investigation is to determine whether Bitmain's Mining Rigs have undisclosed “backdoors” or remote control capabilities. The concerns of U.S. authorities are primarily focused on two levels: first, whether these devices could potentially be remotely controlled by China to steal sensitive data or conduct cyber espionage; second, in extreme cases, whether they could be used to coordinate attacks or incapacitate critical infrastructure such as the U.S. power grid.

To verify these concerns, investigators employed various means. On one hand, U.S. Customs and Border Protection intercepted and seized thousands of Mining Rigs destined for the United States at the ports. On the other hand, technical experts conducted physical disassemblies of the seized equipment, thoroughly examining the internal chip designs and firmware code in an attempt to find any potential malicious features or hidden instructions. Furthermore, the investigation scope was extended to whether Bitmain had any potential violations of tariffs and import taxes.

It is noteworthy that this survey spans the administrations of both Biden and Trump, showing a growing consensus between the two parties in the U.S. on a tough stance against the potential threat posed by Chinese technology. However, as of now, the officials involved in the survey have refused to disclose whether any specific malicious features were found in the devices, nor have they made public the specific progress or final conclusions of the investigation, leaving the entire event shrouded in a veil of mystery.

America's national security anxieties are not unfounded. As early as 2023, a deep report by The New York Times revealed that some Bitcoin mining farms linked to Chinese capital are surprisingly located near sensitive facilities in the U.S., such as the Microsoft data center supporting the Pentagon and Air Force nuclear missile bases. The vast majority of the equipment used in these mining farms is produced by Bitmain. This “physical proximity” has triggered heightened federal alertness.

Immediately following this, in July 2024, a report released by the U.S. Senate Intelligence Committee directly named Bitmain, stating that its devices have “several disturbing vulnerabilities” and could potentially be manipulated by Chinese entities, posing an “unacceptable risk” to the United States.

In addition to the sensitivity of geographical location, Bitmain's absolute dominance in the global market is another key factor that the United States cannot ignore. According to a report from Cambridge University, Bitmain once controlled over 80% of the global Bitcoin ASIC Mining Rig market. If combined with another Chinese manufacturer, MicroBT, the two companies together accounted for as much as 97% of the market share. This means that the entire Mining industry infrastructure of the United States, the world's largest Bitcoin computing power nation, largely relies on Chinese hardware supply. This high level of dependence is undoubtedly a Damocles sword hanging over its head amid escalating geopolitical tensions.

Bitmain Responds

In response to severe allegations from the United States, Bitmain made a strong rebuttal. The company's spokesperson clearly stated that the claim regarding its equipment being remotely controlled is “unequivocally false.” Bitmain emphasized in an official statement that the company “strictly adheres to all applicable laws and regulations in the United States and has never engaged in any activities that pose a risk to U.S. national security,” and expressed that it is completely unaware of the so-called “Red Sunsetting Operation.”

Regarding the incident of the Mining Rig being detained at the US port, Bitmain explained that this was merely a routine inspection by the Federal Communications Commission (FCC) aimed at ensuring that the equipment complies with electromagnetic compatibility standards, and ultimately “no anomalies were found.” The company also denied any association with the Chinese government.

Despite Bitmain's vigorous self-defense, the potential impacts of this investigation have begun to surface. In February of this year, several publicly listed mining companies in the U.S. experienced delays in Mining Rig deliveries due to the tense trade relations between China and the U.S. If the “Red Sunset Action” ultimately reaches an unfavorable conclusion for Bitmain, the consequences will be far-reaching. Measures that the U.S. government may take include but are not limited to: imposing high punitive tariffs, implementing import bans, and even placing Bitmain on the entity list. This will directly lead to U.S. miners facing supply shortages of equipment and soaring operating costs, and could potentially trigger a restructuring of the global Bitcoin Mining industry chain, accelerating the rise of non-Chinese brands (such as domestic U.S. manufacturers).

What adds complexity to this investigation are the political factors involved. According to documents disclosed by the U.S. Securities and Exchange Commission (SEC), the mining company “American Bitcoin Corp.”, supported by U.S. President Donald Trump's two sons—Donald Trump Jr. and Eric Trump, made a significant deal with Bitmain this August, spending $314 million to purchase 16,299 units of Bitmain's Antminer series Mining Rigs.

This business relationship has raised concerns about potential conflicts of interest. However, a spokesperson for the “American Bitcoin Company” responded that the company “places great importance on national security, grid stability, and operational safety,” and has conducted extensive security testing on the purchased hardware, finding no vulnerabilities that allow for remote access. The company claims that its mining facilities are isolated and monitored under a strict security framework and do not pose a threat to the U.S. infrastructure network.

Conclusion

The Bitmain investigation is not just a security review of a single company; it is an extension of the Sino-U.S. tech war in the emerging field of cryptocurrency. It profoundly reveals the inherent contradictions between the global supply chain and national security interests. Regardless of the investigation's outcome, this incident has sounded the alarm for the global Bitcoin mining industry: in an increasingly divided world, the borderless nature of technology is facing more severe geopolitical challenges. In the future, the diversification and localization of mining hardware supply chains may become an inevitable choice for countries to ensure the security of their digital infrastructure. For Bitmain and the entire cryptocurrency industry, finding a balance between commercial interests and national security will be a long-term and daunting challenge.