DHS’s “Operation Red Sunset” Investigating Chinese Bitcoin Mining Giant Over National Security Concerns

The Department of Homeland Security has launched an investigation dubbed “Operation Red Sunset” into Bitmain Technologies, China’s leading Bitcoin mining equipment maker, over concerns its hardware could compromise U.S. national security, sources told Bloomberg.

Federal officials are examining whether Bitmain’s machines, deployed at mining sites near military installations and critical infrastructure, are vulnerable to remote manipulation by foreign actors, according to the report. Additionally, the probe is also reviewing potential import duty violations by the Beijing-based company.

Among the locations of particular concerns is a facility in close proximity to an U.S. Air Force nuclear missile base in Cheyenne, Wyoming. In July, a Senate Intelligence Committee report flagged the risk of Chinese-made devices being remotely controlled, spotlighting potential vulnerabilities in the nation’s security perimeter.

DHS inspectors currently examine mining hardware and components at U.S. ports of entry, conducting chip and firmware analyses to detect backdoors or other security flaws, yet the agency hasn’t disclosed its findings.

Bitmain has rejected the allegations as “unequivocally false,” claiming it adheres to all U.S. legal requirements. In a statement, the company said that 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” and that it “has no awareness of or any information at all regarding any alleged federal investigation purported to be called ‘Operation Red Sunset.’”

Bitmain also attributed past equipment detentions to routine Federal Communications Commission queries rather than espionage concerns, and disputed the Senate committee’s characterization of security risks.

Bitmain faced similar accusations during Bitcoin’s 2017 “block size wars,” when the cryptocurrency community fractured over network scaling, Gizmodo reported. While the developer ecosystem and most users backed the Segregated Witness upgrade, which required 95% miner approval to activate, Bitmain drew suspicion over its hardware’s role in the contentious debate.

At the time, Bitmain dismissed the accusations as a smear campaign, but the episode raised questions about whether the world’s largest mining equipment supplier was leveraging its market position to influence protocol decisions for competitive advantage. SegWit ultimately activated without the block size increase Bitmain had advocated for, resolving the standoff, Gizmodo pointed out.

“Operation Red Sunset” has drawn heightened attention following American Bitcoin’s $314 million purchase of 16,000 Bitmain machines in August. The venture, linked to former President Donald Trump’s family, said it conducted comprehensive security assessments and found no threats.

In late March, a small publicly traded company made a surprising announcement: It would spin off part of its business into a new venture that counted Eric and Donald Trump Jr. as investors. This new company, American Bitcoin, “aims to become the world’s largest, most efficient pure-play Bitcoin miner,” according to a press release. The startup inherited options to acquire Bitmain equipment that its predecessor had arranged.

Headquartered in Miami, the company plans to build data centers in Texas, New York and Alberta, Canada, that would run 76,000 mining machines, according to corporate filings. -Bloomberg

And to get that all going, American Bitcoin went to Bitmain. 

Of course, the assessment won’t stop anti-crypto zealot Sen. Elizabeth Warren (D-MA) from demanding an investigation into American Bitcoin.