WASHINGTON: President Joe Biden on Monday signed an order demanding that a Chinese-founded firm halt its operations and sell off the Wyoming cryptocurrency mine it had built one mile away from the Air Force base with nuclear-armed intercontinental ballistic missiles under its command.
The president, in an executive order, described the cryptomining facility as “a threat to national security of USA,” saying that it may be used for surveillance or intelligence activities because its tools could be easily transformed into spyware.
Citing a New York Times article last October, Microsoft flagged this Chinese-connected crypto mine to the federal Committee on Foreign Investment in the United States, which warned that it might allow China to conduct full-spectrum intelligence collection operations. The president’s order said that these findings were made following an investigation by this committee which indicated potential national security threats.
The risks identified by him were not specified in this directive. However, “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,” according to Microsoft’s report submitted to a federal committee last year and obtained by The New York Times.
Accordingly, within 90 days, all activities at this mine should stop now while within 120 days after ceasing operations; owners must take out their equipment and either sell their stake or transfer ownership as required by those who are affected. However, most equipment used for cryptomining across USA is manufactured by various companies operating from China.
These huge warehouses or shipping containers contain supercomputers continually operating day and night at trillions of calculations per second trying different numeral combinations until they find one which rewards them with new cryptocurrencies such as bitcoin currently valued over $60,000 each. Cheyenne’s alone can consume so much electricity that it may power approximately 55,000 homes if it were running at maximum levels.
Since they were effectively banned in 2021, Chinese-owned cryptocurrency mines have proliferated in the United States. Nevertheless, since then, a few cryptomining facilities had been allowed to reopen in China. These Chinese crypto entrepreneurs also take advantage of the country’s relatively cheap electricity and well-developed legal system to set up shop there.
According to The Times, at least 12 states (including Arkansas, Ohio, Oklahoma, Tennessee and Texas) house Chinese-owned or -operated bitcoin mines that use as much power as 1.5 million homes altogether. A number are owned by individuals or firms with interests tied to the Communist Party or the Chinese government. Until recently this town was home to one of the Communist Party’s major offices on Hainan Island where most mining equipment suppliers had their headquarters.
Only last month did Biden sign a bipartisan bill prohibiting TikTok social media app from operating within the USA unless its ownership is transferred from China.
Not long ago elected officials also went after Chinese-owned cryptomining operations for the second time within weeks.
Two bills were signed by the Republican Governor of Arkansas, Sarah Huckabee Sanders this month which restrict foreign ownership of cryptomining operations in the state. The legislation bars cryptomine ownership by foreigners from China, Iran and Cuba, among others countries falling under State Department rules known as ITAR (International Traffic in Arms Regulations).
There has been a massive influx of bitcoin mining operations into Arkansas over the last few years. An article in the Times noted that an authoritarian Chinese government linked investors were running at least three mines in Arkansas during October. In one post, a former operative tied to those operations said they had surveyed “over 200 target mining sites” across more than 10 states.
These are changes to Arkansas’ law governing ownership of cryptomining operations in order to amend last year’s so-called Right to Mine law that gave broad protections for industry and limited local regulation but triggered severe opposition from people around mining areas. One such operation is currently being sued by neighbors who claim that their houses have become valueless because of constant noise generated by thousands of computer cooling fans. Besides new controls on noisy mining activity, amended statute asks cryptomines with any part owned by foreign nationals subject to arms regulations to completely divest within a year.
The MineOne Partners Limited as well as other related Delaware-registered entities is what Biden targeted with his order. A suit filed against MineOne by a Wyoming-based crypto currency firm necessitated disclosure about its ownership revealing some Chinese citizens among them. In 2022 Bit Origin Ltd., formerly a Chinese pork producer now engaged in cryptocurrency business became one partner in a MineOne entity and constructed its mine which started functioning at the beginning of 2023.
Li Jiaming, President of Bit Origin Ltd., could not be reached immediately for comment. In an interview last year, Li said they chose the site because they had gotten into an agreement with the local power company to supply them electricity not because of the base or data centre being close by.
