Bitmain | US National Security Probe

Key Takeaways

• DHS is probing Bitmain rigs for hidden remote-access risks linked to China.
• Large deployments near sensitive U.S. sites triggered the investigation.
• Potential import violations and restrictions could hit U.S. Bitcoin miners hard.

The United States is investigating Bitmain, a Chinese company that makes most of the world’s Bitcoin mining machines. According to a report by Bloomberg, the government wants to know if these machines could be used for spying or sabotaging important systems in the U.S.

The probe, called “Operation Red Sunset,” is being led by the Department of Homeland Security. Officials are checking whether Bitmain machines have hidden features that might allow someone in China to control them from afar.

This could lead to data theft, surveillance, or damage to U.S. infrastructure.

To find out more, federal agents have taken some of Bitmain’s machines at U.S. ports and taken them apart to inspect the chips and software for “malicious capabilities.”

According to Bloomberg, U.S. authorities became alarmed after discovering that large groups of Bitmain machines were running close to important and sensitive locations.

These include power stations, military bases, and even a U.S. Air Force nuclear missile site in Wyoming. A government review called this situation a “significant national security risk.” Officials worry that the machines could be remotely controlled from China.

A Senate Intelligence Committee report said the machines could be manipulated from China and had “several disturbing vulnerabilities.” The report also warned that having so many of these devices next to key U.S. facilities was “an unacceptable risk.”

While investigators were checking the machines, the White House National Security Council was also holding policy meetings about the issue. These discussions began during Biden’s administration and continued after the change in leadership.

Some reports say these meetings briefly stopped after Trump took office, but the government publicly denies that policy work was halted.

DHS has not commented publicly on the status of the investigation, with a spokesperson only saying that the department “does not comment on open and active investigations,” as Bloomberg reports.

In addition to national security concerns, investigators are also looking into whether Bitmain violated import or tariff laws. This means authorities are examining whether the machines were brought into the country legally and whether all required duties were paid.

Bitmain and another Chinese company, MicroBT, control almost the entire global market for Bitcoin mining hardware. If the U.S. decides to restrict or ban these machines, American Bitcoin miners would struggle to find alternatives.

Other manufacturers exist, but they are often more expensive, less powerful, or difficult to obtain in large numbers.

The report says Bitmain denied the allegations, saying the claims against it are “unequivocally false.” The company insists it “strictly complies with U.S. and applicable laws and regulations, and has never engaged in activities that pose risks to U.S. national security.”

Bitmain insists that it follows all U.S. laws, and that it cannot remotely control its machines. It also highlighted that it has no connection to the Chinese government, and had never heard of “Operation Red Sunset”.

Bitmain says that when its devices were held at U.S. ports, it was due to normal inspections from the Federal Communications Commission, and nothing suspicious was found.

The issue is drawing even more attention because Eric Trump and Donald Trump Jr. have business ties to Bitmain. Their company, American Bitcoin Corp., recently bought 16,000 Bitmain machines for about $314 million. Instead of cash transfers, they agreed to pay with bitcoin over time.

For now, no one knows the current status of Operation Red Sunset. National security investigations can take years and might never lead to public charges or court cases.