On August 15, Reuters disclosed a piece of news that sent shockwaves through the global tech community and financial markets: the U.S. Department of State is drafting a letter to 35 countries, demanding that they take sides in the AI race with China. The letter issues a tough warning: if these countries also join China-led AI cooperation frameworks, they will be excluded from the U.S.-led AI alliance.
📄 Core content of the letter:
This draft letter is being prepared by the U.S. Department of State, addressed to the 35 signatory countries that signed the U.S. (AI Opportunity Declaration) this past June. The wording in the draft is unequivocal—“Trying to align with all camps means having nothing. Signing (the Silicon Peace Declaration) is not only a matter of gaining membership; it is a commitment.” Although the letter does not directly name China, it clearly instructs countries, on AI-related issues, to “make well-considered choices,” and not to join initiatives that conflict with the U.S. position at the same time.
A U.S. official who asked not to be named told Reuters bluntly: The purpose of this letter is to send a message—“You can’t have it both ways.”
🔍 Background of the event: The head-on clash between two AI systems
The root cause of this “choose-sides” crisis is that the two AI cooperation frameworks built by China and the U.S. are colliding head-on:
· The U.S. “Silicon Peace” (Pax Silica) initiative: Launched last December, it aims to ensure the security of supply chains for AI models, semiconductors, and critical minerals. The initial signatories were seven; it has since expanded to about 24 countries, including Japan, Australia, South Korea, and other U.S. close allies.
· China WAICO (World Artificial Intelligence Cooperation Organization): Founded in Shanghai this July, it is the world’s first AI intergovernmental organization. So far, 29 countries have signed agreements to become founding members, including Russia, Kazakhstan, Pakistan, Indonesia, and others.
⚠️ The spark: Kazakhstan “stands on both sides”
The direct reason that has put Washington on high alert is this—Kazakhstan is currently the only known country to have joined both of the above initiatives at the same time. The U.S. only this June promoted Kazakhstan as the first country in Central Asia to join “Silicon Peace” because it has reserves of critical minerals that are essential to advanced technology. However, Kazakhstan has also joined China’s WAICO, which clearly crosses Washington’s red line.
🎯 The U.S.’s true intent: Cutting off China’s resource supply lines
Reuters analysis says that by pressuring countries to choose sides, the United States intends to cut off China’s resource supply lines, thereby preventing China from developing the most cutting-edge AI technologies that could be used to gain military or economic advantages. In essence, this letter is a “de-Sinicization” supply-chain alliance recruitment pitch—an attempt by the United States to expand “Silicon Peace” from a small circle of seven countries into an exclusive bloc covering AI, semiconductors, and critical minerals.
Meanwhile, the U.S. is also stepping up its containment at the hardware level:
· NVIDIA’s H20 sales to China—about $4.6 billion per quarter—have been completely cut off by export controls.
· The U.S. Department of Commerce’s Bureau of Industry and Security announced that it will conduct case-by-case reviews of export license applications for NVIDIA H200, AMD M1325X, and similar chips.
· The U.S. House Foreign Affairs Committee, by an overwhelming majority, is advancing a bill that would grant Congress the power to regulate AI chip exports.
· The U.S. State Department plans to allocate up to $50 million to promote the “Silicon Peace” AI assistance program, establishing AI supply-chain certification and traceability platforms. The first wave will be piloted in Panama, using “digital passports” to track the sources of high-value AI products and their transportation routes, to prevent China from obtaining advanced chips through third countries.
💡 Deep impact on the crypto market:
This AI geopolitical confrontation is deeply affecting the crypto world in two ways:
1. Hardware supply chain: Cost shocks to mining and decentralized AI
Crypto mining and decentralized AI networks rely heavily on advanced GPUs and AI chips. U.S. export controls on advanced chips could significantly affect the economics of crypto mining operations. If such controls are tightened further, it will change the cost-and-benefit structure of crypto mining and affect the global distribution of mining hardware. Any legislation restricting the flow of AI chips could create bottlenecks in agreements that depend on international node operators or computing-power providers. In other words, an AI chip ban doesn’t just cut off China’s AI “lifeline”; it also indirectly drives up hardware costs for global crypto miners and decentralized AI projects.
2. Cybersecurity: China’s AI models are defending Bitcoin
This may be the most unexpected connection. Due to the strict usage restrictions the United States places on frontier AI systems, open-source developers and security researchers in the Bitcoin community have found that—when it comes to defensive cybersecurity work—the performance of China’s AI models actually exceeds that of the restricted U.S. systems.
Researchers have been forced to rely on China’s AI models to find vulnerabilities and protect critical Bitcoin infrastructure. Earlier, the Bitcoin Policy Institute held related discussions on Capitol Hill, raising concerns that U.S. AI restrictions could weaken the nation’s ability to defend the security of its own crypto assets.
If the U.S. further forces countries to choose sides in the AI space, the global technology landscape will accelerate its split into two mutually isolated ecosystems. Such a split may affect cross-border payments, digital asset regulatory standards, and interoperability standards that crypto protocols depend on.
💡 What do you think?
This yet-to-be formally issued letter from the United States sends a clear signal: the “digital iron curtain” in the AI space is accelerating. From chip export controls to diplomatic coercion to choose sides, the U.S. is systematically building technological barriers.
Singapore economist Chen Guangyan says that the U.S. and China are forming two competing global technology ecosystems. For the crypto market, this means a new era is coming in which hardware costs rise, the distribution of computing power is reshaped, and the cybersecurity dependency landscape changes.
Whether the letter will ultimately be sent, when it will be sent, and whether its content will be modified are still uncertain. But regardless of whether the letter is finally mailed, the global technology system’s polarization is irreversible.
Investing involves risks; decisions should be made carefully. This article is for information sharing only and does not constitute any investment advice.
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