The US government has launched a security review of Bitmain, the Beijing-based manufacturer that sells most of the world’s Bitcoin mining rigs. The months-long federal investigation, known internally as Operation Red Sunset, is examining whether Bitmain’s machines could be remotely controlled for espionage purposes or used to interfere with the U.S. power grid. The questions are abstract and sound like something you would enter in a confidential memo. But the answers can be found in the most mundane places: repair benches in North Dakota, shipyards in Oklahoma, and the upgrade calendars of every miner dependent on Chinese hardware.
Before chasing what will break, we need to understand what Washington is actually doing.
Inside Operation Red Sunset
Red Sunset has been working with multiple agencies for about two years, according to documents reviewed by Bloomberg and people familiar with the matter. It is led by the Department of Homeland Security and supported by the National Security Council. The purpose of the investigation is to determine whether Bitmain’s rigs can be controlled externally in a way that could be useful for espionage or sabotage.
Federal employees are already sensitive to hardware. Some of Bitmain’s shipments were stopped at U.S. ports and disassembled on inspection tables to examine hidden features in the chips and firmware. Officials also turned to tariffs and import issues, merging security concerns with more routine trade enforcement.
In an emailed statement to Bloomberg, the company said it was “patently false” that it could remotely control its machines from China, and said it complies with U.S. laws and does not engage in activities that threaten national security. The company also said it was not aware of the investigation known as “Operation Red Sunset,” that previous hardware seizures were related to Federal Communications Commission concerns, and that “nothing unusual was found.”
Officials are not discussing the matter alone. A Senate Intelligence Committee report has already warned that Bitmain’s devices are vulnerable and susceptible to manipulation from China. A few years ago, researchers discovered Antminer firmware that allows remote shutdown. Bitmain framed it as an unfinished anti-theft feature and later patched it, but this episode left a mark.
Red Sunset is also placed on a concrete case. In 2024, the U.S. government shut down a Chinese-linked mining operation near a missile base in Wyoming, citing national security risks associated with the thousands of rigs at the site. The hardware was similar, but the geography was much more sensitive.
In other words, the government sees Bitmain as more than just a vendor. The company is treated as an infrastructure player based near the power grid and in some cases near strategic locations. This way, ASIC manufacturers will be included in the same documentation set as carriers and power equipment.
And all of this is unfolding while Bitmain deepens its relationship with its highly visible American customers.
American mining machines are full of Bitmain metals
In March, a small and relatively unknown publicly traded company announced it would spin out a new Bitcoin mining venture with Eric and Donald Trump Jr. as investors. The new venture, called American Bitcoin Corp., aims to be “the world’s largest and most efficient pure Bitcoin miner” and plans to operate 76,000 machines in Texas, New York and Alberta. To get that tremendous number of miners, we turned to Bitmain.
American Bitcoin has agreed to buy 16,000 Bitmain rigs for $314 million, according to a company filing. The company pledged 2,234 BTC to secure the hardware instead of paying cash or utilizing traditional debt. The structure is so unusual that a former SEC enforcement lawyer told Bloomberg that the terms probably belong to more detailed disclosures.
This one transaction minimizes the dependency problem. A prominent miner with ties to the president’s family is betting thousands of bitcoins and ambitious growth goals on a Chinese supplier that is the subject of a national security investigation. Officials are already concerned that the deal poses a conflict of interest for an administration seeking to turn the United States into the “crypto capital of the world.”
But despite the tremendous amount of power they are putting into Bitcoin mining, the sons of presidents are just a drop in a very, very large ocean. Over the past decade, US miners have installed hundreds of thousands of Bitmain units across the country. The business of creating new Bitcoins in North America rests almost entirely on the shoulders of Antminers, utilizing chips and code never designed with this level of geopolitical fever in mind.
So when you ask what would happen “if Bitmain were attacked,” you’re actually asking what would happen if the central vendor in that stack ran into not just market risk, but federal policy.
What will break first when Washington shakes?
Every serious miner runs a pipeline of broken hardware. Because the fan will fail, the power will go out, or the hashboard will burn out. Some of it can be handled in-house, but the majority is handled through authorized repair centers within the Bitmain ecosystem. The company has a list of international and regional repair locations covering the U.S. market, with delivery lanes in states such as Arkansas, North Dakota and Oklahoma.
That pipe is very fragile, so it’s most likely to break first. If the U.S. government chooses to take tough measures, such as putting Bitmain and its major affiliates on the Entity List or imposing targeted sanctions, the easiest place to pull is at the border. Spare parts may be stored in temporary warehouses until they arrive at customs for “inspection.” A process that previously took days can now stretch into weeks as lawyers and compliance teams consider the new rules.
For a single mining operation, the effects appear slowly. As more machines sit in the dark waiting for parts, availability will drop several points and the pile of failed units onsite will continue to grow. Of course, operators with deep pockets will be able to stockpile reserves and avoid risks with a second vendor. But small-scale miners who buy a few rig containers with structured finance and don’t have a warehouse full of back-up boards will soon find themselves feeling real stress.
The next most important thing is the headline order.
Even if Red Sunset were to end with softer measures such as additional licenses for certain chips or mandatory export inspections, Bitmain could still ship S21 and T21 orders to the U.S. with only a delay in schedule. Miners who were expecting a six-week lead time could end up with more than three months of hassle and paperwork before delivery. If the outcome becomes more severe and Bitmain is restricted from supplying certain U.S. buyers, those orders could easily turn from on-time production to unanswered questions.
With so much money being pumped into this sector, wasted time is more than just wasted time, it also includes interest rates, covenants and capital guidance in addition to time. Public miners that told investors they would reach a certain exahash value by a certain quarter now have to explain why the wheels are stuck between Shenzhen and Houston.
As soon as there is uncertainty in the new car pipeline, the used market becomes active. Old Antminers that were being worn out towards retirement suddenly look attractive, as long as their efficiency doesn’t fall too far off the curve. Bitmain’s main competitors, MicroBT and Canaan, are seeing their sales teams quickly become busier.
But they also don’t have a magical warehouse full of high-performance equipment. They have their own production bottlenecks, chip allocations, and promised delivery dates. As U.S. miners attempt to pivot en masse, lead times for alternative hardware will also be extended. Some of that gap could be filled through gray routes, where rigs are shipped via third countries or purchased from intermediaries that can access Bitmain shares without getting caught up in U.S. regulations.
3 ways from here
From the outside looking in, it’s tempting to think in terms of either Bitmain gets banned or nothing happens. There are actually three main paths.
In the first song, a red sunset quietly fades away. DHS continues to monitor and likely submit internal recommendations, and the government has determined that current industrial security practices, network segmentation, and firmware audits are sufficient to manage the risk. Bitmain remains politically unwieldy, but commercially available. Miners have diversified a bit more into MicroBT and Canaan, but the basic structure of the US fleet remains the same, and hash rate growth continues to follow close to its current course.
The second pushes Bitmain into a managed box. This could mean formal mitigation agreements that require companies to meet strict firmware certification standards, submit to third-party audits, and limit certain repair and assembly work to vetted land-based partners. Exports may require additional licenses, and special rules may apply for high-risk sites, such as those near sensitive power grid infrastructure or military installations.
This version is not devastating for miners, but is annoying. Lead times will be extended, litigation costs will increase, and engineers will have to spend more time proving that their work meets new security standards set by the U.S. government. Of course, the hardware will still flow, but the friction will increase and the total cost per installed terahash will be higher.
The third path is the one that everyone in operations fears. Sanctions or entity list designations that feed directly into sales, firmware support, and dollar payments. In that world, Bitmain’s equipment would become harmful to regulated US buyers almost overnight. Repair centers struggle to move parts across borders. Software updates are legally frozen in a gray area. Existing fleets can continue to operate, but their owners should think carefully about how long they will continue to rely on vendors who cannot maintain or upgrade their machines.
This is not Huawei in the core network, so the hashrate will not collapse. However, growth plans will be distorted. With significant capacity that would have been connected to the U.S. power grid going to be exported or relocated over the next two quarters, the narrative that Bitcoin mining is becoming a U.S.-dependent, grid-friendly industry will start to fade a bit.
Why this matters more than mining Twitter
On the surface, this is a niche story about a customs hold, but at heart it’s a test of how the United States will treat Bitcoin’s physical infrastructure.
Washington has already determined that mining sites may be sensitive, as Wyoming learned when a Chinese-linked facility near a missile base was shut down. The company is live investigating Bitmain’s hardware, with agents destroying rigs and lawyers debating whether Chinese-made ASICs should be treated more like communications equipment than gaming cards. And the company has a presidential family member, and its main mining operations are tied by contract to the same suppliers.
If the government backs down or just walks away with a slap on the wrist, the message is that Bitcoin’s industrial layer can continue to function within the global hardware market while remaining under intense scrutiny. When you push Bitmain into a restricted box, the message is very different. Miners will likely read this as the beginning of a broader campaign to localize, or at least de-risk, key parts of their mining stack.
For others, the stakes are one level higher in abstraction. The security budget that protects Bitcoin is paid through these machines. The more expensive, complex, and politically fraught it becomes to operate in the United States, the more that money will be shifted elsewhere.
The headline question is, if Bitmain were to be attacked, what would be destroyed first within the mining machine? The quieter question is whether the United States wants to run these machines along its own power grid or prefers to push them back into other countries’ backyards.
