President Biden on Monday ordered a company with Chinese origins to shut down and sell the Wyoming cryptocurrency mine built a mile from an Air Force base that controls nuclear-armed intercontinental ballistic missiles.
The cryptomining facility, which runs high-powered computers in a data center near F.E. Warren Base in Cheyenne, “presents a risk to the national security of the United States,” the president said in an executive order, because its equipment they could be used for surveillance and espionage.
The New York Times reported last October that Microsoft, which operates a nearby data center supporting the Pentagon, had reported the China-linked cryptocurrency mine to the Federal Committee on Foreign Investment in the United States, warning that it could allow the Chinese to “pursue full-spectrum intelligence collection operations.” A committee investigation identified national security risks, per the president's order.
The ordinance does not describe these risks in detail. But Microsoft's report to the federal committee, obtained last year by the Times, states: “We suggest the possibility that the computing power of an industrial-scale cryptomining operation, coupled with the presence of an unidentified number of Chinese citizens in the immediate vicinity of the Microsoft site The Data Center and one of three strategic missile bases in the United States, provide significant threat vectors”.
Now, the mine must immediately cease operations and the owners must remove all their equipment within 90 days and sell or transfer ownership within 120 days, according to the ordinance, which cites the risks of the facility's “foreign-sourced” mining equipment. The vast majority of machinery powering cryptomining operations in the United States is made by Chinese companies.
Cryptomining operations are housed in large warehouses or shipping containers filled with specialized computers that typically run around the clock, performing trillions of calculations per second, searching for a sequence of numbers that will reward them with a new cryptocurrency. The most common is Bitcoin, which is currently worth more than $60,000 each. Cryptocurrency mines consume a huge amount of electricity: at full capacity, the Cheyenne mine would draw as much energy as 55,000 homes.
Chinese-owned cryptocurrency mines have seen a boom in the United States since the facilities were effectively banned in China in 2021. Although some cryptomining activities have since resumed in China, Chinese cryptocurrency entrepreneurs are attracted to the United States for relatively cheap electricity and well-developed laws. system.
The Times discovered Chinese-owned or operated Bitcoin mines in at least 12 states, including Arkansas, Ohio, Oklahoma, Tennessee, Texas and Wyoming, which together consume as much energy as 1.5 million homes. Some are owned by people or companies linked to the Chinese government or the Communist Party. Until recently, the main supplier of mining equipment operated from an office in a Communist Party facility on Hainan island, the Times found.
President Biden's order comes on the heels of signing a bipartisan bill in late April banning the social media app TikTok in the United States unless its Chinese owner sells it.
This is also the second time in recent weeks that Chinese-owned cryptomining operations have been targeted by elected officials.
This month, Arkansas Republican governor Sarah Huckabee Sanders signed two laws restricting foreign ownership of cryptomining operations in the state. The legislation bans the ownership of cryptocurrency mines by foreign nationals from China, Iran, Cuba and other countries subject to State Department rules known as the International Traffic in Arms Regulations.
Arkansas has seen a large influx of Bitcoin mining operations in recent years. In October, the Times reported that Chinese investors with ties to the authoritarian government were operating at least three mines in Arkansas. A former employee connected to the operations wrote that he had scouted “over 200 target mine sites” in more than 10 states.
The laws restricting ownership of cryptomining operations in Arkansas are intended to amend last year's so-called Right to Mine law, which offered broad protections to the industry while limiting local regulation and sparking a fierce backlash among residents near the mines. One such operation, with links to Chinese citizens, is the subject of a lawsuit by residents who say the incessant whine of thousands of fans cooling computers has ruined their lives and lowered property values. In addition to new restrictions on noise operations, the amended law requires cryptomines owned anywhere by foreign nationals subject to weapons regulations to be completely decommissioned within one year.
Mr. Biden's order is directed at an offshore company called MineOne Partners Limited and related MineOne entities registered in Delaware. A lawsuit against MineOne brought by a Wyoming cryptocurrency company forced it to reveal its owners, including Chinese nationals. In 2022, Bit Origin Ltd., a former Chinese pork producer dedicated to cryptocurrency mining, partnered with a MineOne entity and built the mine, which began operating in early 2023.
Li Jiaming, president of Bit Origin Ltd., was not immediately available to comment. In an interview last year, Mr Li said investors had chosen the site because they had secured a contract with the local power company to supply electricity, not because of its proximity to the base or data centre.