US probes Chinese bitcoin-mining machine giant Bitmain over national security concerns: Bloomberg

Bitmain, the Chinese manufacturer that supplies most of the world's bitcoin mining equipment, has reportedly been the subject of a months-long investigation to assess whether its products pose risks to U.S. national security.

Security concerns over Chinese-owned bitcoin mines intensified last year after a New York Times investigation reported that several facilities with ties to the Chinese Communist Party were operating near critical U.S. infrastructure, including one next to a Microsoft data center supporting the Pentagon and near an Air Force nuclear missile base in Cheyenne, Wyoming. Many of these operations were equipped with Bitmain machines.

The firm's name resurfaced again in July in a Senate Intelligence Committee report that said its devices could be manipulated from China and posed "several disturbing vulnerabilities" to the U.S.

At the same time, Bitmain has been at the center of a previously undisclosed investigation, known as "Operation Red Sunset" and led by the Department of Homeland Security, Bloomberg reported on Friday, citing a U.S. official and six other people familiar with aspects of the inquiry. Specifically, the probe was launched to assess whether the Beijing-based firm's machines could be remotely manipulated for spying or used to compromise the U.S. power grid, the people said.

The probe included chip and firmware inspections of Bitmain machines stopped at U.S. ports, and ran in parallel with policy discussions at the White House's National Security Council that began under President Joe Biden and continued into at least the early months of the Trump administration, according to the U.S. official and three of the people. Investigators also reportedly examined potential tariff and import tax violations.

The officials declined to say what investigators found, and the current status of the inquiry remains unclear. A spokesperson for the Department of Homeland Security told Bloomberg that it "does not comment on open and active investigations."

The DHS and Bitmain did not immediately return a request for comment from The Block.

'Unequivocally false': Bitmain pushes back on claims as political concerns mount

Bitmain told Bloomberg it "strictly complies with U.S. and applicable laws and regulations and has never engaged in activities that pose risks to U.S. national security," describing claims that it can remotely control devices as "unequivocally false."

The company added that it was unaware of any investigation named Operation Red Sunset, or one into tariffs or other import duties, and attributed past equipment detentions to routine Federal Communications Commission concerns, stating that "nothing out of the ordinary was found." Bitmain also rejected suggestions of ties to the Chinese government raised in the Senate report that described its equipment as presenting "an unacceptable risk" when deployed near sensitive U.S. facilities.

The probe has drawn fresh attention in Washington as President Donald Trump's sons expand their involvement in the bitcoin mining sector amid ongoing conflict-of-interest concerns. Their venture with Hut 8, American Bitcoin, purchased 16,000 Bitmain machines in August for $314 million, according to SEC filings. 

American Bitcoin "takes national security, grid stability and operation security extremely seriously," a spokesperson for the firm told Bloomberg, adding that it conducted extensive security tests on the hardware and found no vulnerabilities that would permit remote access.

Trump officials have also rejected concerns that the Trump family’s crypto ventures could influence federal investigations.

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