US authorities have launched an investigation into Chinese Bitcoin mining giant Bitmain, focusing on whether its hardware poses national security risks. The probe, disclosed by Bloomberg, centres on claims that Bitmain’s application-specific integrated circuit (ASIC) miners may contain remote control capabilities that could enable espionage or disrupt the US power grid.

US Homeland Security Leads “Operation Red Sunset”

Sources familiar with the matter revealed that the US Department of Homeland Security is spearheading an investigation known as Operation Red Sunset. One US official and six additional individuals told Bloomberg that Bitmain’s mining equipment is being examined for possible vulnerabilities or built-in backdoors. Investigators have reportedly dismantled some ASIC units to assess whether they contain components that could be used for spying or sabotage. They did not confirm if any evidence of wrongdoing was discovered.

The investigation follows a series of earlier actions that targeted companies connected to Bitmain. In October 2024, US authorities examined Xiamen Sophgo, a Chinese chipmaker linked to Bitmain, over allegations that it had business ties with Huawei, which is under US sanctions. A month later, US Customs and Border Protection stopped thousands of Bitmain ASICs from entering the country. The detained machines were only released in March this year.

Chinese Dominance Raises Industry Concerns

Bitmain remains the world’s most influential Bitcoin mining hardware manufacturer. A Cambridge study estimates that the company controls more than 80 per cent of the global ASIC market. Chinese firms dominate almost the entire sector, since Bitmain and the second-largest manufacturer, MicroBT, hold around 97 per cent of market share combined.

Any restrictions placed on Bitmain machines would carry significant consequences for US-based mining firms that depend heavily on Chinese-made hardware. The industry has already seen the effects of geopolitical tension. In February, publicly listed mining companies in the US suffered notable delays in receiving shipments of ASICs due to strained US-China trade relations.

Bitmain Rejects Allegations

Bitmain strongly denies the claims. A spokesperson told Bloomberg that the suggestion the company can remotely access its machines is “unequivocally false.” The representative added that Bitmain complies fully with all relevant US laws and has never engaged in conduct that could jeopardise national security. The company also stated that it is unaware of any federal investigation into its products or operations.

Trump Family’s Mining Interests Could Be Affected

The probe may also have political implications, since restrictions on Bitmain hardware could impact American Bitcoin, a mining firm backed by members of President Donald Trump’s family. In August, American Bitcoin purchased 16,299 Antminer U3S21EXPH units from Bitmain. The company also acquired a large inventory of ASICs previously owned by Hut 8, including more than 31,000 Antminer S21+ machines.

In September, American Bitcoin announced that it would receive preferential access to upcoming ASIC technology, although it did not explicitly refer to Bitmain. SEC filings show that American Bitcoin paid for hardware through pledges of Bitcoin, which come with a redemption period of 24 months. The Guardian reported that these terms are unusually favourable.

Given Bitmain’s near-total control of the market, American Bitcoin is not the only major player that might be affected by the investigation’s outcome. Any future restrictions or seizures of imported ASICs could disrupt mining operations across the country, making the probe one of the most consequential regulatory developments for the US crypto mining industry this year.