US authorities monitor China-linked Bitcoin miners amid national security concerns: Report

A crypto mining operation near a Microsoft facility that supported the Pentagon was reportedly under scrutiny by U.S. officials.

Officials within the United States government were reportedly keeping tabs on certain cryptocurrency mining operations with ties to China.

According to an Oct. 13 report from The New York Times, many Bitcoin (BTC) data centers based in the U.S. can be traced directly to the Chinese government, raising concerns over operations in close proximity to military bases and other areas connected to national security. One of the sites reportedly being monitored by authorities was a mining operation in Wyoming near a Microsoft data center that supported some of the Pentagon’s operations.

“Microsoft has no direct indications of malicious activities by this entity,” said the firm in a report on the operation. “However, pending further discovery, 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 U.S., provides significant threat vectors.”

The company, Bit Origin, which converted the infrastructure from a pork processing facility into a crypto data center, reportedly chose the location due to an agreement with local utility providers rather than proximity to the Microsoft facility. The firm shifted its operations from Indiana to Wyoming in September, and reported it had 3,200 miners deployed producing a hash rate of 320 petahash per second as of Sept. 30.

The report highlighted some of the ramifications of establishing mining operations linked to the Chinese government or certain nationals amid political tensions between the U.S. and China. Many mining companies fled China in 2021 as the government banned their operations, forcing some to U.S. soil and crypto-friendly jurisdictions like Texas and Wyoming.

Many U.S. authorities have targeted individuals or firms connected to China through crypto. On Oct. 3, the Treasury Department sanctioned crypto wallets allegedly tied to the production of the drug fentanyl, which included several China-based chemical manufacturers. In July, claims that crypto firm Prometheum had ties to the Chinese government prompted calls for an investigation by six members of Congress.

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