Federal Probe into Bitcoin ASIC Manufacturer
Bitmain, the leading manufacturer of Bitcoin mining application-specific integrated circuits (ASICs), is reportedly under investigation in the United States due to national security concerns. The investigation is focusing on whether Bitmain's hardware could be exploited for spying or to disrupt the US power grid.
According to a Bloomberg report, an unspecified US official and six other anonymous sources familiar with the matter stated that Bitmain's ASICs are the subject of a federal investigation codenamed "Operation Red Sunset." This probe is being led by the US Department of Homeland Security.
This development follows previous scrutiny of Bitmain-linked entities. In October 2024, US authorities investigated Xiamen Sophgo, a Chinese chip designer associated with Bitmain, over an alleged business relationship with Huawei, a company sanctioned by the US. Subsequently, the US Customs and Border Protection Agency halted the delivery of thousands of Bitmain ASICs in November 2024. The hardware began to be released by authorities in March of the current year.
Dominance of Chinese Manufacturers in the ASIC Market
The potential consequences of restrictive measures on Bitmain machines could be significant for the US cryptocurrency mining industry. Bitmain alone controls over 80% of the Bitcoin mining ASIC market, according to a report from Cambridge. The dominance of Chinese companies in this sector is even more pronounced, with Bitmain and the second-largest manufacturer, MicroBT, both based in mainland China, collectively holding 97% of the market share.
Investigators have reportedly disassembled Bitmain ASICs in some instances to search for malicious capabilities, as disclosed by the anonymous officials to Bloomberg. They did not confirm whether any such capabilities were discovered.
Bitmain's Response to the Investigation
A spokesperson for Bitmain stated to Bloomberg that claims of the company's ability to remotely control its machines are "unequivocally false." The representative asserted that Bitmain "strictly complies with US and applicable laws and regulations and has never engaged in activities that pose risks to US national security," and that the company is unaware of the investigation.
Implications for US-Based Mining Operations
The investigation into Bitmain could also have implications for companies with ties to the US President's family. In August, American Bitcoin, a Bitcoin mining company backed by members of the Trump family, acquired a fleet of 16,299 Antminer U3S21EXPH units from Bitmain.
American Bitcoin also acquired "substantially all" of Hut 8's ASICs, which included 31,145 Bitmain Antminers S21+ machines purchased approximately a year prior.
In September, American Bitcoin announced "preferential access to next-generation ASIC compute infrastructure," without explicitly naming Bitmain. US Securities and Exchange Commission (SEC) filings also indicate that American Bitcoin "paid through the pledge of Bitcoin" with a "redemption period of 24 months from each pledge date," terms that The Guardian has described as unusually generous.
Given Bitmain's significant market share, American Bitcoin is not the only major US-based cryptocurrency mining company that could be affected by the findings of this investigation. The industry previously experienced disruptions in mid-February when publicly traded mining companies in the US encountered delays in receiving ASIC shipments due to trade tensions between the United States and China.