Washington is putting Bitmain under pressure testing, with the first failures expected to occur in U.S. mining farms rather than on Wall Street terminals.
Written by: Andjela Radmilac
Translated by: Chopper, Foresight News
The U.S. government has initiated a security review of Bitmain, the Beijing-based manufacturer that dominates the global Bitcoin mining machine market. A federal investigation known as "Red Sunset Operation" has been ongoing for several months, focusing on whether Bitmain's mining machines can be remotely controlled for espionage or to disrupt the U.S. power grid. This issue may seem abstract, as if it only exists in classified memos, but the answers are closely related to several ordinary scenarios: maintenance workbenches in North Dakota, freight yards in Oklahoma, and the upgrade schedules of every miner relying on Chinese hardware.
To understand the potential chain reactions that may follow, it is essential to grasp the true intentions of the U.S. government.
Decoding the "Red Sunset Operation"
According to documents reviewed by Bloomberg and sources familiar with the matter, the "Red Sunset Operation" has been advancing among multiple government departments for about two years, led by the Department of Homeland Security with support from the National Security Council. The core objective of the investigation is to confirm whether Bitmain's mining machines can be externally controlled, potentially for espionage or deliberate sabotage.
Federal law enforcement has taken action against Bitmain's hardware. Some mining machines have been intercepted at U.S. ports and disassembled on inspection tables, with chips and firmware undergoing hidden function tests. Officials have also checked customs and import-related issues, combining security concerns with routine trade enforcement.
In a statement sent to Bloomberg, Bitmain asserted that "the claim that the company can remotely control mining machines from China is completely false," emphasizing its compliance with U.S. laws and that it does not engage in any activities threatening national security. The company also stated that it was unaware of any investigation named "Red Sunset Operation," and that the previous hardware seizure incident was related to a review by the Federal Communications Commission (FCC), with "no abnormalities found."
The U.S. government's concerns are not unfounded. A report from the Senate Intelligence Committee has labeled Bitmain's equipment as "high-risk assets vulnerable to Chinese control." Years ago, researchers discovered that Antminer firmware had a remote shutdown feature; Bitmain explained it at the time as an "unfinished anti-theft feature," and although it was later patched, the incident left security vulnerabilities.
The advancement of the "Red Sunset Operation" is also based on a concrete case. In 2024, the U.S. government forcibly shut down a mining project in Wyoming, near a missile base and linked to Chinese capital, due to the national security risk posed by thousands of mining machines deployed at the site, which used hardware similar to Bitmain's products and were located in a highly sensitive area.
Thus, the U.S. government appears to view Bitmain as more than just a supplier of equipment; it is seen as "an infrastructure participant close to the grid and partially near strategic locations." This also explains why a dedicated integrated circuit manufacturer would appear alongside telecommunications companies and power equipment firms in national security-related documents.
All of this is happening as Bitmain deepens its cooperation with a highly influential client in the U.S.
The U.S. Mining Industry Relies on Bitmain
In March 2025, a smaller, lesser-known publicly traded company announced the spin-off of a new Bitcoin mining business, with former U.S. President Trump's sons, Eric Trump and Donald Trump Jr., as investors in the project. The new company, named American Bitcoin, aims to become "the largest and most efficient pure Bitcoin mining company in the world," planning to deploy 76,000 mining machines in Texas, New York, and Alberta, Canada. To achieve this massive goal, the company chose Bitmain as its core supplier.
Corporate documents show that American Bitcoin has agreed to purchase 16,000 Bitmain mining machines for $314 million. Unlike cash payments or traditional debt financing, the company is using 2,234 Bitcoins as collateral to acquire the hardware. A former enforcement lawyer from the U.S. Securities and Exchange Commission (SEC) told Bloomberg that this transaction structure is unusual and that the relevant terms should be disclosed in more detail.
This deal highlights the "dependency dilemma" of the U.S. mining industry: a mining company closely associated with the presidential family and under scrutiny is betting thousands of Bitcoins and ambitious growth targets on a Chinese supplier currently under national security investigation. U.S. officials are concerned that this partnership could create conflicts of interest for the current administration, which aims to make the U.S. a "global cryptocurrency hub."
However, even though the Trump sons' mining project plans to invest massive computing power, it is just a "drop in the ocean" within the entire U.S. mining industry. Over the past decade, U.S. miners have deployed hundreds of thousands of Bitmain mining machines nationwide. Bitcoin mining operations in North America are almost entirely reliant on Antminers.
Therefore, when we ask, "What will happen if Bitmain is impacted?" we are essentially exploring how the entire system will bear the pressure when a core supplier in this industrial ecosystem faces federal policy shocks.
If the U.S. government takes strong measures, who will collapse first?
Every mature mining company faces equipment wear and tear issues: fan failures, power supply burnouts, and hash board damages are common. Some failures can be handled internally, but most need to be resolved through authorized repair centers within Bitmain's ecosystem. Bitmain has overseas and regional repair centers covering the U.S. market, with shipping channels spread across Arkansas, North Dakota, Oklahoma, and other locations.
This repair and parts supply system is extremely fragile and is most likely to collapse first. If the U.S. government takes strong measures, such as placing Bitmain or its core affiliates on the entity list or implementing targeted sanctions, the easiest method would be to intercept at the border. Spare parts could be held up in temporary warehouses awaiting customs inspection; processes that normally take a few days could be extended to weeks due to lawyers and compliance teams dealing with new regulations.
For individual mining companies, the impact will gradually become apparent: more mining machines will sit idle due to a lack of parts, equipment availability will slightly decline, and malfunctioning equipment will pile up in the mining farms. Well-capitalized mining companies can stockpile parts and shift purchases to secondary suppliers, but smaller mining companies will quickly face immense pressure.
Next to be impacted will be the delivery of large orders.
If the "Red Sunset Operation" concludes with mild measures, such as adding licenses for specific chips or enforcing export reviews, Bitmain may still be able to deliver S21 and T21 series mining machines to the U.S. market, but delivery times will be extended. A delivery time originally expected to be six weeks could stretch to three months or longer, accompanied by cumbersome paperwork. If the outcome is more severe, and Bitmain is restricted from supplying specific U.S. buyers, those planned orders will shift from "certain capacity" to "uncertain factors."
Given the mining industry's heavy reliance on financing, time loss is not merely a delay: it means additional interest expenses, risks of violating loan covenants, and the inability to fulfill equity return commitments to shareholders. A publicly traded mining company that has promised investors to "reach a specific computing power scale in a certain quarter" will have to explain why equipment is still stuck in transit from Shenzhen to Houston.
Once uncertainty arises in the supply of new equipment, the second-hand mining machine market will heat up rapidly. Those old Antminers that were about to be retired will suddenly become highly attractive as long as their efficiency is not significantly lagging. Sales teams from Bitmain's main competitors—Shenma Mining and Canaan Creative—will become busy in an instant.
However, these competitors do not have magic warehouses filled with efficient mining machines; they also face production bottlenecks, chip quota limitations, and pressures from committed delivery orders. If U.S. mining companies collectively turn to alternative suppliers, the delivery times for these alternative hardware will also be extended. Some supply-demand gaps may be filled through gray channels, such as mining machines being transshipped through third countries or purchased from intermediaries that still have access to Bitmain's inventory without violating U.S. rules.
Three Possible Future Directions
From an external perspective, people tend to judge using binary logic: either Bitmain is banned, or it is unaffected. However, in reality, the situation may unfold in three ways.
In the first scenario, the "Red Sunset" quietly comes to an end. The Department of Homeland Security continues monitoring, perhaps submitting some internal recommendations, but the government ultimately believes that the current industry security measures, network isolation, and firmware audits are sufficient to manage risks. Bitmain may still face political embarrassment, but it can continue supplying the U.S. market commercially. Mining companies will further diversify their procurement from Shenma Mining and Canaan Creative, but the overall landscape of the U.S. mining industry will remain unchanged, with computing power growth largely maintaining its current trend.
In the second scenario, Bitmain will fall under regulatory scrutiny. This may require a formal mitigation agreement, demanding that Bitmain meet strict firmware certification standards, undergo third-party audits, and delegate specific repair and assembly work to vetted U.S. partners. Exports may require additional licenses, and high-risk areas (such as mining farms near sensitive grid infrastructure or military facilities) may face special regulatory restrictions.
For mining companies, this direction, while troubling, is not catastrophic. Delivery times will be extended, legal costs will rise, and engineers will need to spend more time proving operations comply with the new safety standards set by the U.S. government. However, hardware supply will continue, albeit with increased friction costs and higher overall costs per unit of deployed computing power.
The third path is the one mining companies fear the most: sanctions or being placed on the entity list, which will directly impact sales, firmware support, and dollar settlements. Overnight, Bitmain's equipment will become a nightmare for regulated U.S. buyers: repair centers will struggle to transport parts across borders, and software updates will fall into legal gray areas. Existing mining machines may still operate, but mining companies will need to seriously weigh whether they are willing to rely long-term on a supplier that cannot provide service and upgrades.
Bitcoin computing power will not collapse, as Bitmain is not Huawei and has not penetrated the core U.S. network. However, growth plans will be hindered: a significant amount of computing power that should have been connected to the U.S. grid in the next two quarters will be delayed or shifted overseas, and the narrative that "Bitcoin mining is becoming a U.S.-led, grid-friendly industry" will also become untenable.
Why the Impact of This Event Extends Beyond Mining?
On the surface, this is a niche news story about customs seizures, but fundamentally, it is a test of the U.S. government's attitude toward the physical infrastructure of Bitcoin.
The U.S. government has made it clear about the sensitivity of mining locations (such as the closure of the Wyoming mining farm near a missile base); it is conducting real-time investigations into Bitmain's hardware, with agents disassembling mining machines and lawyers debating whether specialized integrated circuits from China should be classified as "telecommunications equipment" or "gaming graphics cards"; meanwhile, the presidential family's mining project is deeply tied to this supplier through contracts.
If the U.S. government backs down or only imposes mild penalties, the signal sent is that while the Bitcoin industry faces strict scrutiny, it can still operate normally in the global hardware market. If Bitmain is placed under a restrictive framework, the signal will be entirely different: mining companies will interpret it as the beginning of "localization or de-risking of core links in the mining industry."
For other participants, the risks are even more profound. The "cost budget" for protecting Bitcoin security is borne by these mining machines. If operating these devices in the U.S. becomes more expensive, more complex, and politically risky, this portion of the budget will shift to other regions.
The core question is, if Bitmain suffers a blow, which component of the U.S. mining industry will collapse first? And the deeper question is, does the U.S. truly want these mining machines roaring in its domestic grid, or is it more willing to push them toward other countries?
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