7 months ago
21
WASHINGTON:
President Joe Biden
on Monday ordered a company with Chinese origins to shut down and sell the Wyoming
cryptocurrency mine
it built a mile from an Air Force base that controls nuclear-armed intercontinental ballistic missiles.
The cryptomining facility, which operates high-powered computers in a data center near the FE Warren base in Cheyenne, "presents a
national security risk
to the
United States
," the president said in an executive order, because its equipment 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 flagged the Chinese-connected cryptocurrency mine to the federal Committee on Foreign Investment in the United States, warning that it could enable the Chinese to "pursue full-spectrum intelligence collection operations." An investigation by the committee identified risks to national security, according to the president's order.
The order did not detail those risks. But Microsoft's report to the federal committee, obtained last year by the Times, said, "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 US, provides 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 the property within 120 days, according to the order, which cites the risks of the facility's "foreign-sourced" mining equipment. A vast majority of the machinery powering
cryptomining operations
across the United States is manufactured by Chinese companies.
Cryptomining operations are housed in large warehouses or shipping containers packed with specialized computers that typically run around the clock, performing trillions of calculations per second, hunting for a sequence of numbers that will reward them with new cryptocurrency. The most common is bitcoin, currently worth more than $60,000 apiece. Crypto mines consume an enormous amount of electricity: At full capacity, the one in Cheyenne would draw as much power as 55,000 homes.
Chinese-owned cryptocurrency mines have boomed in the United States since the facilities were effectively banned in China in 2021. While some cryptomining has since restarted in China, Chinese crypto entrepreneurs are drawn to the United States for its relatively cheap electricity and well-developed legal system.
The Times found Chinese-owned or -operated bitcoin mines in at least 12 states, including Arkansas, Ohio, Oklahoma, Tennessee, Texas and Wyoming, that together use as much power as 1.5 million homes. Some are owned by people or companies with links to the Chinese government or the Communist Party. Until recently, the main supplier of equipment for the mines operated from an office in a Communist Party facility on Hainan Island, the Times found.
Biden's order comes on the heels of his 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 prohibits cryptomine ownership 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 of scouring "over 200 target mining 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 by limiting local regulation, and set off a fierce backlash among residents near the mines. One of those operations, with connections to the Chinese nationals, is the target of a lawsuit by residents who say the incessant whine from the thousands of fans cooling the computers has ruined their lives and depressed property values. In addition to new restrictions on noisy operations, the amended law requires cryptomines owned in any part by foreign nationals subject to the arms regulations to completely divest within one year.
Biden's order is directed at an offshore company called
MineOne Partners Limited
and related MineOne entities registered in Delaware. A lawsuit against MineOne filed by a Wyoming cryptocurrency company compelled the disclosure of its owners, which included Chinese nationals. In 2022 Bit Origin Ltd., a former Chinese pork producer that pivoted to cryptocurrency mining, became a partner in 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, Li said investors had chosen the site because they had secured a contract with the local power company to supply its electricity, not because of its proximity to the base or the data center.
