The National Security Risks and Investment Implications of Chinese Bitcoin Mining Firms in the U.S.

The rise of Chinese Bitcoin mining firms in the United States has become a focal point of national security debates and investment strategy recalibrations. As these firms expand their footprint, they bring both opportunities and risks that demand rigorous scrutiny through the lenses of strategic asset allocation and regulatory risk assessment.

The Growing Influence of Chinese Mining Firms

Chinese companies like Bitmain, Canaan, and MicroBT dominate over 90% of global Bitcoin mining hardware production GOP Lawmaker Seeks Reviews of Two Bitcoin Mining Machine Makers, [https://www.bloomberg.com/news/articles/2025-09-09/gop-lawmaker-seeks-reviews-of-two-bitcoin-mining-machine-makers]^[1]. Their U.S. operations have surged in recent years, driven by trade policy shifts under the Trump administration and the need to avoid tariffs. For instance, Bitmain's U.S. subsidiary has sold over $300 million in mining machines to American Bitcoin Corp, while Cango's opaque ownership structure has drawn congressional attention US Congressman Calls for Probe Into Chinese Bitcoin Mining, [https://finance.yahoo.com/news/us-congressman-calls-probe-chinese-142019107.html]^[2]. These firms have contributed to a dramatic increase in the U.S. share of Bitcoin's global hashrate—from 4% in 2019 to 38% in 2025 Chinese Bitcoin Mining Giants Move Production to US Amid Tariff Tensions, [https://cryptoslate.com/chinese-bitcoin-mining-giants-move-production-to-us-amid-tariff-tensions/]^[3]. However, their presence raises concerns about energy consumption, foreign-state affiliations, and the use of non-domestic chips in critical infrastructure U.S. Congress Pushes Forward on Federal Bitcoin Reserve Plan, [https://coincentral.com/u-s-congress-pushes-forward-on-federal-bitcoin-reserve-plan/]^[4].

Regulatory Scrutiny and National Security Concerns

The U.S. government has responded with heightened vigilance. A Republican congressman, Zachary Nunn, has called for a CFIUS review of Bitmain and Cango, citing risks to infrastructure and financial sovereignty If Crypto Assets Are Shaking Up Finance, How Do You Stabilize Risk?, [https://www.ey.com/en_ch/insights/banking-capital-markets/if-crypto-assets-are-shaking-up-finance-how-do-you-stabilize-risk]^[5]. This follows a ban on a crypto mining facility near a Wyoming Air Force base over surveillance fears US Tariffs on Mining Rigs Are Rising Sharply, [https://cointelegraph.com/news/us-china-trade-war-bitcoin-mining-tariffs]^[6]. Meanwhile, the Trump administration's “pro-innovation” stance has positioned Bitcoin as a strategic asset akin to gold, mandating the creation of a federal Bitcoin Reserve to manage seized holdings Bitcoin as a Strategic Reserve Asset: Economic, Financial, [https://en.iss.gov.mn/?p=1734]^[7]. The SEC, while clarifying that proof-of-work mining falls outside its regulatory purview, has emphasized case-by-case evaluations to address potential securities law violations SEC Staff Clarifies Stance on Crypto Mining, [https://www.gtlaw-financialservicesobserver.com/2025/03/sec-staff-clarifies-stance-on-crypto-mining/]^[8].

Strategic Asset Allocation and Risk Frameworks

The integration of Bitcoin into sovereign asset portfolios remains contentious. The U.S. holds approximately 207,189 BTC (valued at $17 billion) in its Digital Asset Stockpile, while China's holdings of 194,000 BTC ($16 billion) reflect its own strategic calculus The National Security Framework as a Cybersecurity Reference for Information Cryptosystems, [https://www.researchgate.net/publication/387901241_The_National_Security_Framework_as_a_Cybersecurity_Reference_for_Information_Cryptosystems]^[9]. Frameworks like EY's Crypto Risk Assessment Matrix (C-RAM) are being deployed to evaluate macroeconomic risks, including cross-border transaction dependencies and cybersecurity vulnerabilities Measuring Cryptocurrency Maturity, [https://papers.ssrn.com/sol3/Delivery.cfm/5160115.pdf?abstractid=5160115&mirid=1&type=2]^[10]. For example, the U.S. National Cybersecurity Strategy, alongside the 2022 National Security Framework, aims to mitigate threats from foreign-owned mining operations, particularly those with ties to Chinese cyber espionage campaigns US Crypto Policy Tracker Regulatory Developments, [https://www.lw.com/en/us-crypto-policy-tracker/regulatory-developments]^[11].

Investment Trends and Geopolitical Implications

Chinese firms are adapting to U.S. trade policies by localizing production. Bitmain began U.S. manufacturing in December 2024, while Canaan and MicroBT are implementing localization strategies to avoid tariffs Bitcoin as a Reserve Asset? A Cautionary Analysis for the Federal and State Governments Amid Bear Markets and Fiscal Risk, [https://www.researchgate.net/publication/390555212_Bitcoin_as_a_Reserve_Asset_A_Cautionary_Analysis_for_the_Federal_and_State_Governments_Amid_Bear_Markets_and_Fiscal_Risk]^[12]. This shift has spurred a 31.6% U.S. hashrate share in June 2025, but it has also exposed American miners like CleanSpark to CBP disputes over Chinese-origin equipment . Investors must weigh these dynamics against the volatility of Bitcoin as a reserve asset. While its fixed supply offers inflation-hedging potential, its correlation with equities during bear markets undermines its reliability .

Conclusion

The interplay between Chinese Bitcoin mining firms and U.S. national security interests underscores the need for a balanced approach. While these firms have bolstered the U.S. hashrate and driven technological innovation, their opaque ownership and geopolitical ties necessitate robust regulatory frameworks. Strategic asset allocators must navigate these risks through tools like CORM and C-RAM, while policymakers must balance innovation incentives with cybersecurity imperatives. As the U.S. and China vie for dominance in the digital asset era, the stakes for investors and regulators alike have never been higher.