In the US, a number of Bitcoin mining camps are starting to attract the attention of the public and authorities, and what is special about these mining camps is that they originate from China. This presence not only poses dangerous energy security issues but also threatens national security and the US power grid system.

Bitcoin mining camps, which can be imagined as special factories, are equipped with a series of specialized computers to create digital currencies and operate continuously, 24/7. The problem is that they consume a huge amount of electricity. And when placed right next to important databases and computer centers, or even near nuclear missile bases controlled by the US military, risks begin to arise.

According to Microsoft, such a location could help China take advantage of these mining camps to gather intelligence. Microsoft has warned about this risk, and the US government has monitored mining camps in the state of Wyoming, where the above activities are taking place. Measures have been taken to minimize the risk, but there are still no signs of concrete improvement from those measures.

The Chinese-run Bitcoin mining camp in Cheyenne, Wyo., is located next to the Microsoft data center, above. Photo: The New York Times The mining camp location is about 30 meters from FE Warren Air Force Base, where missiles are controlled. nucleus, about a mile. Photo: The New York Times

Not only are there intelligence concerns, but these mining farms also put significant pressure on the power grid, as they need to operate continuously to "mine" digital currencies like Bitcoin. Additionally, with the increasing number of mining camps, there is a risk of putting great pressure on the power grid and causing it to become congested.

Brian Harrell, a former expert from the US Department of Homeland Security, warned that, if these mining camps coordinated attacks, they could put "enormous pressure" on the power grid. This issue can cause targeted power outages and facilitate cyber attacks.

But the problem is not just limited to pressure on the power grid, but also involves network security. Mining farms often have digital connections to power grid operators, and if poorly managed, can open up attacks on other critical systems.

Risk of insecurity when China bans Bitcoin mining

The situation became especially serious after China banned Bitcoin mining in May 2021, due to concerns about energy consumption and impact on economic stability. Hardware manufacturing company Bitmain then began shipping more of its Bitcoin mining equipment to the US.

According to information, there are currently Bitcoin mining camps owned or operated by Chinese people, spread out in at least 12 US states. These mining camps use the same amount of electricity as 1.5 million homes. Notably, when running at maximum capacity, the mining camp in Cheyenne, Wyoming alone requires enough electricity to supply 55,000 homes.

Many of these mining farms are equipped by Bitmain, a Chinese company with no direct links to the mainland government, but according to equipment import documents, they have sent some shipments to the US. through a subsidiary based at a state agency. According to this document, since China banned Bitcoin mining, Bitmain has shipped 15 times more equipment to the US than in the previous 5 years. A recent presentation by the company also claimed that they control 90% of the global market for Bitcoin mining equipment.

The documents also show that the Cheyenne mining camp involved five companies, all of which used the same office space on Park Avenue in Manhattan. One of them is registered in the Cayman Islands and until last year, it was a Chinese pork processing company. But The New York Times said they did not find any link between the owner of the mining camp in Cheyenne and China.

Microsoft also released a 16-page report and did not find any direct signs of potentially risky activities from this company. However, the software giant has emphasized the possibility of cryptocurrency mining operations becoming industrialized, with the presence of Chinese nationals near Microsoft's Data Center, and one of three bases. US strategic missiles can create significant threat factors.

In a recent investigation by The New York Times, mining farms were determined to consume about 4,000 megawatts of electricity – enough to power more than three million American homes – with more megawatts still to come. deployed.

The impact of cryptocurrency mining on energy security has been noted. In Texas, the company that manages the power grid revealed that the unpredictable behavior of some mining farms could lead to “emergency conditions.” Many mining farms also have digital connections to power grid operators, and if not managed properly, could allow these mining farms to infiltrate critical networks.

In particular, Bitmain's dominance in the mining market has raised many concerns. In the past, researchers have found a “backdoor” that could allow the company to operate its devices secretly. After discovering this problem in 2017, the company confirmed it could control the excavators remotely. A similar issue was found in 2019, but Bitmain did not respond to questions about backdoors on their devices.

Helicopter footage over the mining camp in Cheyenne. The location near the missile base and data center caused Microsoft to send a warning to the US government.

In July of this year, an official with the North American Electric Power Stability Assurance Agency, notified Congress of the increased risk of cyberattacks from China. And a recent report from the Office of the Director of National Intelligence warns, “if China feels that major conflicts with the United States are inevitable,” it will almost “certainly consider conducting aggressive cyber attack on critical infrastructure in the United States.”

Faced with that situation, a famous security consulting company, The Chertoff Group, has been approached by many "critical infrastructure providers" to seek advice on the risks from Bitcoin "mining camps", especially especially mining camps related to China, according to Ben Joelson, one of the company's security experts.

Currently in many US states, dissatisfaction with this situation is also quite evident. An Arkansas state senator said, “We are so worried about TikTok, but no one seems to say anything about Chinese companies connecting to our system.” This situation continues to raise an important question about how the Bitcoin industry is regulated in relation to China and what role the government should play in deciding whether to control or support this activity.

Across the United States, information about the companies that own Bitcoin mining farms is often hidden under the cover of the financial companies involved. Some of them are companies that actually have ties to China, especially the government or state-owned entities.

According to an interview and public announcement, in the city of Cheyenne, Wyoming, a contract dispute lawsuit revealed that Bitmain is participating in a mining camp near a US air force base, they are also involved in Mining operations in Arkansas and Washington state.

According to records from Import Genius, a trade data collection tool, Bitmain's exports to the US over the past 15 months were conducted through a subsidiary, Hainan Bitmain Technologies, located at a Chinese state guest house in Wanning, a city on the eastern side of Hainan island.

Zhang Xinyu, an employee listed as a contact in business records, said the Bitmain subsidiary is no longer at the guest house and that local authorities in China usually provide that temporary address. to help businesses quickly open branches.

However, this is a very unusual arrangement. Usually, guest houses are reserved for official events or official training sessions. According to information compiled by Sayari, a company that compiles business information, among the tens of millions of companies registered in China, there are less than 150 companies registered in guest houses, and many of them belong to China. about state-owned enterprises.

Chinese companies are cross-owned

Li Jiaming, general manager of Bit Origin Ltd., the pork processing company turned Bitcoin mining farm, said that they chose this location because they were secured by an agreement from the local power company to supply electricity, not because they want access to Microsoft's data center or nearby missile base.

“Even though we are neighbors with Microsoft and a few miles from an air force base, we have made sure to work according to regulations and comply with the laws in the US, without electricity we cannot do anything – business cannot succeed,” Mr. Li said.

In the city of Cheyenne, records show that another Chinese company involved in Bitcoin mining purchased a private plot of land near a Microsoft data center. The company, called YZY Capital Holdings, is registered to a $7.5 million apartment in the TriBeCa section of Manhattan and is run by Mr. Yuan Qian, a businessman and member of the Chinese state. Quoc. There is information that he once participated in a government advisory committee in Wuhan. He also manages a multi-industry group that owns auto dealerships, biotechnology companies and financial companies.

Mr. Yuan's company sold another plot of land in Cheyenne to a group of investors, and this has caused concern at Microsoft,. His company also owns a Bitcoin mining camp in eastern Oklahoma, near the small town of Oktaha. There, the local utility company built a substation to serve the mining camp. According to revealed information, this mining camp consumes more electricity than 41,000 houses.

In the state of Arkansas, Chinese investors operate at least three mining farms, and are planning to open more. Outside Greenbrier, about an hour's drive from Little Rock, one of the mining camps has drawn protests from neighbors. This farm has more than 20 Antboxes, which are specialized containers manufactured by Bitmain to hold hundreds of computers. It consumes more energy than a nearby town.

In Arkansas, Chinese investors have at least one mining camp and have plans to open more. A mining camp outside the Greenbrier has sparked backlash from neighbors. Photo: The New York Times

There are at least eight companies involved in this farm. And public records collected by people protesting the mining camp show it is linked to a real estate company called Greenland Holdings in Shanghai, of which the Chinese government owns nearly 50%. This company has invested more than 7 billion dollars in the US and the head of this company's US branch, Mr. Hu Gang, visited Arkansas.

On LinkedIn, a former employee of the company, Gloria Yao, put out a call to join her group and searched for “more than 200 potential mining sites” while connecting with the power company and chamber of commerce. commercial in more than 10 states. The post was removed after residents began questioning the company's motives.

The US is wary of Chinese mining camps

In recent years, several states have passed or proposed bills restricting Chinese land ownership due to security concerns, but China-linked Bitcoin operations continue to operate. at many locations across the United States.

In June 2021, Texas Governor Greg Abbott signed the “Lone Star Infrastructure Protection Act,” which prohibits companies owned by foreign competitors from doing business and accessing infrastructure. important floor. China is the first country considered an opponent in this law.

Republican officials in Texas have deep suspicions of China, but their acceptance of Chinese-linked Bitcoin miners is proving deeply appealing. of cryptocurrencies in conservative circles, where doubts about central banks are running high.

“I want Texas to be an oasis for Bitcoin and cryptocurrency,” Sen. Ted Cruz, a Republican, said at a Bitcoin conference in April. Technology in general. “I want everyone to come to Texas,” he emphasized.

This state has attractive incentives to make it the most popular destination for Bitcoin miners. One program pays miners for agreeing to shut down computers when the power grid is overloaded, such as during the record-breaking heat wave that hit the state this past summer. Since 2020, Bitdeer has been awarded nearly $50 million from the deal, according to data published by the grid operator.

However, the rise of the mining industry in Texas has begun to affect the state's power grid, which is one of the weakest in the US because it is not connected to other states.

The Texas Electricity Assurance Authority recently reported that Bitcoin mining farms' energy consumption and lack of transparency led to forecast errors. The agency said mining camps could “increase the severity of grid failures,” and affect reliability.

One proposal to mitigate this risk is to regulate the rate at which mining farms can start or stop using energy. According to Howard Gugel, vice president at NERC, the agency tasked with protecting the US power grid, unlike power producers and transmission companies, Bitcoin mining farms are largely unregulated and operate in the dark. a “gray area”.

Despite the warnings, Chinese mining farms appear to have quickly established themselves in Texas and learned to adapt to the state's political landscape. This raises important questions about how the Bitcoin mining industry will be managed and controlled in the future and the decision-making power at the local and federal government levels on whether to allow or regulate mining activities. encryption related to China.

Amid the complex international situation and growing competition in the cryptocurrency sector, monitoring and evaluating China-related Bitcoin mining activities has become an important task for security. America's nation and infrastructure. Part of this challenge is balancing between encouraging the development of cryptocurrency technology and protecting national privacy and security.