US Orders Shutdown of Chinese-Owned Crypto Mine Near Air Force Base Amid Security Concerns

US President Joe Biden has ordered a Chinese-owned cryptocurrency mining facility in Wyoming to cease operations and sell its property. Citing national security concerns, the decision follows an investigation by the Committee on Foreign Investment in the United States (CFIUS) that determined the mine's proximity to a missile base and Microsoft data center posed potential risks for spying. The order mandates the immediate shutdown of operations, with 90 days to remove equipment and 120 days to sell the property.

U.S. Shuts Down Chinese-Owned Crypto Mine Near Air Force Base Amidst National Security Concerns

Yerevan, Armenia (CoinChapter.com) - President Joe Biden has issued an executive order mandating the immediate closure and divestment of a Chinese-owned cryptocurrency mining facility located in close proximity to the F.E. Warren Air Force Base in Cheyenne, Wyoming.

National Security Risk Assessment

The decision follows a thorough investigation conducted by the Committee on Foreign Investment in the United States (CFIUS) which concluded that the crypto mining operation posed a national security risk due to its proximity to a critical military installation and a Microsoft data center that supports the Pentagon.

Espionage Concerns

CFIUS's investigation revealed that the crypto mine could potentially be utilized for espionage activities, given its close proximity to both a missile base and a vital data center infrastructure. Microsoft had previously raised concerns regarding the facility's potential to enable extensive intelligence gathering.

Immediate Shutdown and Divestment Order

Pursuant to the executive order, the crypto mining facility must immediately cease operations. The owners have been granted a 90-day period to remove all equipment and a 120-day window to sell or transfer the property. The order underscores concerns regarding the utilization of foreign-sourced mining equipment, primarily manufactured by Chinese companies, within the operation.

High Energy Consumption

Cryptomining facilities, such as the one in Cheyenne, typically consist of large warehouses equipped with specialized computers that operate continuously, consuming significant amounts of electricity. At full capacity, the Cheyenne mine had the potential to consume as much power as 55,000 households.

Increased Scrutiny of Chinese Investments

Since China imposed a ban on crypto mining in 2021, numerous Chinese-owned cryptocurrency mining operations have relocated to the United States, lured by cheaper electricity costs and a robust legal framework. Nevertheless, these operations have sparked security concerns, particularly when situated near sensitive locations. A New York Times investigation identified Chinese-owned or operated Bitcoin mines in at least 12 states, collectively consuming electricity equivalent to that of 1.5 million homes.

Legal and Regulatory Implications

MineOne Partners Limited, the entity operating the Wyoming mine, is obligated to comply with the presidential order. Legal proceedings have revealed that Chinese nationals hold ownership stakes within the company, with Bit Origin Ltd., a former Chinese pork producer, becoming a partner in 2022 and initiating operations in early 2023.

Ongoing Geopolitical Tensions

President Biden's recent actions reflect the heightened scrutiny of Chinese investments in the United States. The order aligns with a bipartisan bill seeking to ban TikTok unless its Chinese owner divests its ownership. Additionally, Arkansas has enacted legislation restricting foreign ownership of crypto mining operations, specifically targeting nations such as China, Iran, and Cuba.

Industry Implications

The closure of the Wyoming mine marks the second substantial action taken against Chinese-owned crypto mining operations in the U.S. recently. Arkansas has witnessed a surge in Bitcoin mining activities, prompting the enactment of new laws aimed at mitigating foreign influence. Residents residing near these mines have voiced concerns regarding the incessant noise and its potential impact on property values.

The new Arkansas law compels foreign-owned crypto miners to divest within a one-year timeframe, addressing both security apprehensions and local grievances. The Wyoming shutdown further intensifies the pressure on Chinese investments in the U.S. and underscores the ongoing geopolitical tensions between the two nations.