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CleanSpark Addresses National Security Concerns After Buying $19 Million Bitcoin Mine Near Nuclear Base

Last Updated May 21, 2024 3:21 PM
Teuta Franjkovic
Last Updated May 21, 2024 3:21 PM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Joe Biden’s national security order halted operations at a Bitcoin mining facility near a US missile base
  • This happened shortly after its sale to CleanSpark from MineOne, which has Chinese ties.
  • CleanSpark says it was unaware of any relevant executive order prior to signing the deal.
  • It is prepared to proceed with the acquisition and development of the site.

CleanSpark, an American Bitcoin mining company, finds itself at the center of geopolitical tensions between the US and China. This came after it bought mining sites in Wyoming near a US nuclear missile base for nearly $19 million from MineOne, a company with significant Chinese ownership.

Recently, President Joe Biden issued an order  to cease all operations at the facility near Warren Air Force Base in Wyoming. He cited national security risks from foreign-sourced technology.

However, a spokesperson from CleanSpark told CCN that the acquisition of mining sites from MineOne was primarily driven by the goal of geographical diversification within a Bitcoin-friendly state.

CleanSpark Ready to Proceed With Acquisition, Spokesperson Says

The opportunity to build out its own infrastructure in such a locale was an appealing aspect of CleanSpark’s growth strategy, which it was eager to explore, the spokesperson told CCN.

The spokesperson said:

“There are numerous assessments that play a role in our decision-making when purchasing new sites. No concerns were cited regarding national security as bitcoin mining itself is not a security risk. We were unaware of the executive order before signing the deal.”

In response to the government’s concerns as outlined in the presidential order, CleanSpark plans to fully cooperate with the oversight process. Despite the potential delays caused by the order, the company still wants to complete the purchase and continue to build their own data centers in Wyoming.

The order, described as limited in nature, is not expected to affect CleanSpark’s operation or future investments. The company will still buy and develop the site.

US Forces Removal of Bitcoin Mining Equipment Near Missile Base

The government directive specifies that MineOne, which is majority-owned by Chinese nationals, must remove all mining equipment from within a mile of the military facility in Cheyenne, which is responsible for housing Minuteman III intercontinental ballistic missiles (ICBMs).

The this intervention occurred just days after MineOne transferred the mining sites  to CleanSpark for nearly $19 million.

On May 9, CleanSpark announced  its acquisition of two mining sites, specifying a 45-day closing period, without disclosing the seller. The company plans to use Bitmain’s latest generation mining machines from China. It also aims to increase the sites’ capacity from 75 megawatts (MW) to an 130 MW.

CleanSpark provided full details  of the transaction in filings with United States Securities and Exchange Commission (SEC). The deal’s success relies on securing substantial energy supplies necessary for the operation. Notably, the larger of the two properties acquired is located about 4,000 feet from Warren Air Force Base.

Scrapping Deal with Chinese Company Over National Security Concerns

The sale agreement with MineOne  was signed by Jiaming Li, identified as the Chinese company’s director. Li has served as president of China Xiangtai Food, a partner at TCC Capital. He is also reported to have managed almost $12 billion in assets at Sinatay Insurance. Li holds a doctorate in economics from Fordham University. As well as that, he briefly held the position of president at MineOne investor Bit Origin. It is worth pointing out that Bit Origin has previously faced similar scrutiny from Washington.

The contract between the companies, as disclosed by the SEC, included a 15-day due diligence period starting from May 8. The agreement allowed for the cancellation of the purchase if MineOne failed to meet various conditions, including those related to “government compliance matters.”

Tom Wood, a CleanSpark board member with nearly four decades of experience in National Security and former roles in the US Navy and as a military analyst, expressed his concerns .

He talked about  the specific risk posed by a CCP-owned facility near the base. Wood also mentioned his familiarity with the US Committee on Foreign Investment in the United States (CFIUS) and its process, which he desvribed it as “impartial, data-driven, and non-arbitrary.” He said addressing the order’s concerns could represent a major victory both for the United States and CleanSpark.

Joe Biden Orders Higher Tariffs on Chinese Imports

Recently, the President declared the implementation of new tariffs  on a range of Chinese imports. These include:

  • Electric vehicles.
  • Semiconductors.
  • Batteries.
  • Solar cells.
  • Steel.
  • Aluminum.

Notably, the tariffs on Chinese electric vehicles will rise to 100%, quadrupling the existing rate of 25%.

The directive to divest issued on Monday was coordinated with CFIUS. This relatively obscure yet influential government body  looks at corporate transactions for national security implications. CFIUS can also order changes in ownership structures or compel complete divestitures from American operations.

A 2018 law expanded CFIUS authority to include the review of real estate transactions near sensitive sites, such as Warren.

In 2022, MineOne bought land within one mile of the base. CFIUS said this purchase was not disclosed to the committee , and it only came to their attention following a tip from the public.

CFIUS Orders Removal of Equipment Due to Espionage Risks

The specifics of the national security risks were not detailed in the order. However, the Treasury Department said  that the presence of “specialized and foreign-sourced equipment” on the site could enable surveillance and espionage.

Treasury Secretary Janet Yellen, who chairs the Committee on Foreign Investment in the United States (CFIUS), said  the committee’s primary role was “to ensure that foreign investment does not undermine our national security”.

Following its review, CFIUS has ordered the sale of the property within 120 days. Additionally, the company must remove all structures and equipment from the site within 90 days.

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