The center of the issue is land in Cheyenne, Wyoming, located near Francis E. Warren Air Force Base. MineOne Cloud Computing Investment, a Chinese majority-owned company, purchased this land in June 2022 and was planning to establish a large-scale cryptocurrency mining operation.

However, the US government was concerned that MineOne’s activities could threaten national security. The May 13 executive order justifies these concerns as follows:

The order notes that MineOne Cloud is ultimately affiliated with the British Virgin Islands company MineOne Partners Limited, a company majority-owned by Chinese nationals. This raises concerns that the facilities could potentially be a “full-spectrum intelligence gathering operation.” The crypto mining facility is in a sensitive location due to its proximity to Francis E. Warren Air Force Base, one of three US strategic missile bases. This may provide potential convenience for information gathering activities.

The US government’s concerns were triggered by a report from technology giant Microsoft. Microsoft was close to the land in question because it operates a data center in the area. The company issued a warning to the Federal Committee on Foreign Investment (CFIUS) in October 2023. In this warning, it was stated that the mining operation may pose a risk to national security due to the computing power and location of the facilities.

Following Microsoft’s warning, CFIUS investigated the matter and concluded that MineOne’s activities posed national security risks. These findings led the Biden administration to block MineOne’s land purchase.

The Biden administration’s decision is an indication that the US government is paying increasing attention to the connection between cryptocurrency mining and national security. China’s prevalence in the cryptocurrency mining industry raises national security concerns in the United States. Concerns are being expressed that Chinese companies may engage in intelligence gathering activities through mining operations. The Biden administration’s decision reflects CFIUS’s trend toward more stringent oversight of foreign investments. This could mean increased scrutiny for foreign investments related to critical infrastructure or sensitive technology. This development could also affect the US government’s approach to introducing more comprehensive regulations for cryptocurrencies. Issues such as the environmental impacts of cryptocurrency mining and the potential for money laundering continue to be on the government’s agenda.

The Biden administration’s decision was criticized by cryptocurrency advocates. Republican Senator Cynthia Lummis from the state of Wyoming argued that this decision would “destroy” the cryptocurrency industry. Some experts argue that mining operations do not pose a real threat to national security, but could undermine the US’s technological leadership in the field of cryptocurrencies.

The future depends on how the US government balances its approach to cryptocurrency mining. It needs to find a way to reduce national security risks while supporting the innovative potential of cryptocurrencies. This may mean developing appropriate security measures for both regulation and cryptocurrency mining.