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U.S. Investigating Chinese Bitcoin Mining Plants for National Security Risks

(Photo by MARK FELIX/AFP /AFP via Getty Images)
(Photo by MARK FELIX/AFP /AFP via Getty Images)

By: Micaela Burrow, Daily Caller News Foundation

U.S. national security agencies are taking steps to guard against possible intelligence collection efforts on military sites from Chinese bitcoin mining sites in the U.S., The New York Times reported.

Of particular concern is a site in Cheyenne, Wyoming, that is near both a Microsoft data center that supports Department of Defense (DOD) operations and a military base that maintains nuclear-armed intercontinental ballistic missiles, the NYT reported, citing U.S. officials. China could use the crypto mining plant to “pursue full-spectrum intelligence collection operations,” Microsoft wrote to a national security oversight committee in August 2022.

The unnamed U.S. government officials said that the U.S. has been monitoring China’s activities at the Wyoming site for months and have enacted measures to prevent the site from being used as an espionage hub, one official said without going into detail on specific steps taken.

The Committee on Foreign Investment in the United States (CFIUS), a body created by Congress to scan overseas financial investments for national security risks, queried the Chinese company running the the Wyoming site, according to the NYT. The company told the outlet it has responded to questions.

“Microsoft has no direct indications of malicious activities by this entity,” Microsoft wrote in a 16-page report to CFIUS, according to the NYT. “However, pending further discovery, we suggest the possibility that the computing power of an industrial-level cryptomining operation, along with the presence of an unidentified number of Chinese nationals in direct proximity to Microsoft’s Data Center and one of three strategic-missile bases in the U.S., provides significant threat vectors.”

Cryptocurrency mines consume vast amounts of energy, creating additional fears it could strain regional power grids, according to the NYT. Each site is composed of warehouses stacked with specialized computers.

If Chinese “infrastructure impacts key energy systems, it should immediately draw additional investigation and scrutiny,” Brian Harrell, who served as assistant secretary for infrastructure protection at the Department of Homeland Security in the Trump administration.

Chinese companies own or operate bitcoin mining facilities in at least 12 states that together eat up as much energy as 1.5 million homes, the NYT reported.

Many of the mines use computers made by a Chinese company, Bitmain, that does not appear to have direct connections to the Chinese government. However, some equipment shipments were routed through a subsidiary at a Chinese Communist Party site before reaching the U.S.

China appears to be outsourcing energy supplies for what can be lucrative bitcoin mining operations to the U.S. after Beijing outlawed domestic mining over economic and energy usage concerns, according to the NYT. Bitmain shipments to the United States are now 15 times higher than they were in 2021 before the ban, and the company claims to control 90% of the global market for mining equipment.

Researchers have previously warned that so-called “back doors” in Bitmain’s software would allow the company to remotely operate the equipment, according to the NYT.

The Pentagon did not immediately respond to the Daily Caller News Foundation’s request for comment.

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