The US has launched an investigation into Bitmain, the Chinese manufacturer renowned for its Bitcoin mining hardware, concerning possible national security implications.

On Friday, Bloomberg reported that U.S. officials have commenced a federal inquiry dubbed “Operation Red Sunset” to assess whether Bitmain’s equipment might be utilized for remote data surveillance or could endanger the U.S. power grid.

Previously, Bitmain faced scrutiny due to its affiliation with the Chinese chip designer Xiamen Sophgo in relation to Huawei, a company subject to U.S. sanctions. The situation escalated when U.S. Customs temporarily blocked the delivery of thousands of Bitmain ASICs, only lifting the hold earlier this year.

Impact on the Crypto Mining Sector The ramifications of this investigation could reverberate throughout the U.S. crypto mining market, where Bitmain retains over 80% of the Bitcoin ASIC market, according to a report from Cambridge. With both Bitmain and MicroBT—its closest rival—situated in China, these companies dominate 97% of the mining hardware industry.

Mining hardware distribution by manufacturer chart Source: Cambridge Digital Mining Industry

In response to the investigation, a Bitmain representative claimed the allegations of potential remote control capabilities as “unequivocally false,” asserting that the company adheres strictly to U.S. laws and regulations.

Connection to Donald Trump

Restricting Bitmain’s operations could directly affect U.S. President Donald Trump’s family, considering that the Bitcoin mining firm American Bitcoin has secured a significant number of ASIC units from Bitmain amidst trade tensions. This procurement aligns with previous acquisitions of substantial amounts of hardware from Bitmain.

As a consequence, the broader implications for American Bitcoin and other U.S.-based mining companies remain uncertain, especially given the geopolitical landscape involving trade relations with China.