U.S. Representative Calls for National Security Assessment on Chinese Bitcoin Mining Companies
In a notable move, U.S. Representative Zachary Nunn from Iowa has urged the Treasury Department to conduct a thorough national security assessment of two companies with ties to China that are heavily involved in Bitcoin mining hardware. His request, articulated in a letter dated September 2 and obtained by Bloomberg, targets Bitmain Technologies Ltd. and Cango Inc., highlighting potential concerns regarding their opaque ownership and connections to foreign state entities.
Concerns Over Chinese Influence
Representing Iowa and serving on the House Select Committee on the Chinese Communist Party, Nunn is concerned about the potential implications of Chinese influence in significant sectors of the U.S. economy. Bitmain, based in Beijing, dominates the global Bitcoin mining equipment market, controlling over 80% according to a report by the University of Cambridge. Its affiliate, Cango, is publicly traded on Nasdaq and has recently been identified as a possible acquisition point for Bitmain, although the latter has denied such claims.
Request for Investigation
In his letter, Nunn raised alarms about the burgeoning operations of both companies within the United States, asserting that their intricate ownership structures and financial dealings may obscure vital information from regulators and the public. He has formally requested that the Committee on Foreign Investment in the United States (CFIUS) undertake an investigation into the two firms. CFIUS has previously played a role in high-profile cases, such as the scrutiny of TikTok and the prohibited acquisition of Grindr. Recently, President Biden utilized CFIUS authority to halt a crypto mining project located near a significant Air Force installation in Wyoming due to concerns over surveillance.
Energy Consumption and Foreign Connections
Nunn’s request comes shortly after the American Bitcoin Corp, a mining operation backed by Eric Trump, made headlines for acquiring over $300 million in mining equipment from Bitmain’s U.S. subsidiary. Following speculation that Bitmain might be expanding into energy infrastructure, the company has publicly stated it has no intentions of pursuing ownership in U.S. energy markets.
The Congressman pointed out that Cango’s energy consumption and possible connections to foreign governments warrant further examination, especially in light of broader concerns regarding surveillance technologies potentially employing foreign-made components. Both Bitmain and Cango have claimed compliance with U.S. laws and denied any associations with governmental organizations. Nevertheless, Nunn stressed the urgency of an investigation to safeguard American interests in energy, digital asset commerce, and financial independence.
Ongoing Influence of Chinese Operations
Despite a ban on Bitcoin mining activities in China in 2021, the influence of Chinese operations remains significant. According to Uminers CEO Batyr Hydyrov, approximately 55% to 65% of global Bitcoin mining is still linked to Chinese origins, capital, or expertise. Many Chinese companies have relocated their operations abroad to circumvent restrictions. American production has surged thanks to major firms like Bitmain, Canaan, and MicroBT, which account for 99% of Bitcoin mining hardware manufacturing.
This shift has notably increased the U.S. Bitcoin hash rate from just 4% in 2019 to 38% today, with some former Chinese miners reportedly expanding their capacities by up to 150% post-relocation, even as limited mining persists in less-regulated areas of China.
