US Authorities Uncover Chinese-linked Bitcoin Mining Operations

The discovery of numerous Bitcoin mining operations with ties to China on American soil has flagged serious national security concerns among US authorities. A comprehensive report published by The New York Times on October 13 unveils a substantial presence of Bitcoin data centres in the US, traceable back to the Chinese government. The proximity of some of these operations to critical military and infrastructure sites further exacerbates the apprehensions. A notable case is a mining operation in Wyoming, situated adjacent to a Microsoft data center, pivotal in supporting various Department of Defence initiatives.

Geopolitical Undercurrents

The exploration sheds light on the potential risks emerging from growing Chinese-linked mining operations amidst the escalating political discord between the United States and China. The latter’s decision to outlaw mining activities in 2021 propelled many mining entities to migrate to crypto-receptive US states like Texas and Wyoming. The broader geopolitical implications are palpable as these revelations come at a time of heightened tension between the two superpowers, with the US continually scrutinizing cryptocurrency usage by individuals and corporations affiliated with China. Moreover, six Congress members called for a thorough investigation in July, following allegations of the cryptocurrency startup Prometheum having connections to the Chinese government.

Power Grid and Infrastructure Stress

The infrastructural stress induced by these mining operations is significant. The collective energy consumption of Chinese-owned or operated Bitcoin mining facilities across at least twelve states equates to that of 1.5 million households, posing a considerable demand on the US power grid. These mining facilities, harboring specialized computers operating ceaselessly, have the potential for targeted blackouts and cyberattacks due to their substantial energy usage and the instantaneous capability to escalate or cease operations, presenting a unique challenge among large power users.

Ownership and Equipment Supply

A commonality among these mining operations is the utilization of computing equipment produced by Bitmain, a Chinese enterprise. Following China’s ban on Bitcoin mining in May 2021, there has been a noticeable uptick in equipment shipments from Bitmain to the US. The ownership structures of these mining ventures range from transparent investments by affluent Chinese nationals seeking revenue channels outside China’s jurisdiction, to more murky setups with several traceable back to the Chinese government.

The revelation of Chinese-linked Bitcoin mining operations dispersed across the US, intertwined with substantial energy consumption and potential national security threats, has garnered the attention of both US government officials and corporations. The unfolding scenario evokes pressing inquiries concerning cybersecurity, energy sustainability, and the ongoing geopolitical strain between the US and China.

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Chinese corporations offer metaverse World Cup viewings, X2Y2 backtracks on royalties, and more.

People have said that a lot of technology companies in China are working on making it possible for Chinese soccer fans to watch the FIFA World Cup in the metaverse.

These initiatives are part of a five-year plan that the Chinese government unveiled at the beginning of November with the intention of enhancing the capabilities of and fostering the growth of the local virtual reality (VR) sector.
According to a report from the state-run media outlet Global Times that was published on November 20, the video streaming platform Migu is one of six Chinese companies that have secured the rights to show the World Cup. Migu plans to create a “Metaverse-like” space that will allow users to watch a livestream of the game while wearing virtual reality headsets.
ByteDance, the company that owns TikTok and its Chinese version, Douyin, has been granted the licencing rights to air the competition. ByteDance’s VR headset subsidiary, Pico, will be offering live broadcasts of the World Cup, and users will have the ability to create and congregate in “digital rooms” to watch the game together.
It looks like China’s virtual reality (VR) business, which is still new, is using the World Cup to test out the technology.
On November 1, an ambitious industrial strategy was pushed by the nation’s Ministry of Industry and Information Technology, together with four other agencies in the country.
Even though China’s five-year plan for 2022–2026 says it wants to improve its virtual reality (VR) industry and ship more than 25 million units worth $48.56 billion, the plan doesn’t say if this goal is for each year or for the whole plan.
The plans don’t say anything about whether or not the metaverse would use blockchain technology, like the city of Wuhan’s proposal, which was later changed to remove any mention of non-fungible coins (NFTs).
X2Y2 reduces the amount of the optional royalties. NFT marketplace X2Y2 has recanted its opt-in royalties policy and said in a Twitter thread dated November 18 that it would once again impose creator royalties on all current and future collections.
In August, the marketplace was one of the first to implement alternative royalties. At that time, it transitioned to a system known as “flexible royalty,” which enables purchasers to choose the amount of the royalty that they would pay.
The NFT community responded to it in a variety of different ways.


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China’s Ban On Crypto-Assets Forces Huobi Mining Pool To Rotate 100k Bitcoin

The Chinese crackdown on mining activities has awakened a lot of decisions and actions. Many miners are already trooping to the US, the new mining hub, to continue their operations. Recently, the NDRC (National Development & Reform Commission) in China seized more than 10,000 mining rigs in Inner Mongolia.

The report even disclosed that the operation was the 45th time that the watchdog has carried such out. Given the losses that miners incur in the wake of these incidents, many forward-thinking companies are protecting their interests.

One of such companies to take proactive action is Huobi Global, a crypto exchange with millions of users, including Chinese citizens. The first step the company took was to restrict the Chinese citizens on its platform.

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Now, mainland china residents can no longer access the platform. As a result, Huobi Global is currently moving funds to fill the withdrawal needs of the clients. Also, it plans to stop all Chinese accounts gradually until December 31.

Miners Move Bitcoin To Support Withdrawal Needs

Huobi Global is occupying the eighth position amongst the largest Bitcoin Pools. However, now that they’ve restricted Chinese citizens, the miners have to move their funds worth $4.21 Billion to meet the withdrawal needs.

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China's Ban On Crypto-Assets Forces Huobi Mining Pool To Transfer 100k Bitcoin

China's Ban On Crypto-Assets Forces Huobi Mining Pool To Transfer 100k Bitcoin

Bitcoin is now gradually recovering its previous losses | Source: BTC/USD on

Apart from this Bitcoin fund movement, there were massive movements from Ethereum wallets on September 26, amounting to 800,000 ETH or $2.29 billion from ETH whales.

Related Reading | Miner Refunds The Giant Sum Of 7,626 Ethereum Mistakenly Sent By Bitfinex

The crackdown from the Chinese government is causing havoc in many pools as many exchanges are no longer allowing new entrants. The Huobi Global exchange is amongst the exchanges affected by this development.

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China crypto crime: Still ‘top ranked’ for illicit activity but crime is falling

A new report from Chainalysis has found that while China’s share of global criminal crypto flows has been falling since the third quarter of 2019, the country still represents a disproportionate amount of illicit cryptocurrency activity.

In its August 3 Cryptocurrency and China report, Chainalysis stated that more than $2.2 billion worth of crypto had been sent from Chinese wallets to addresses associated with illicit activity between April 2019 and June 2021.

Chinese addresses also received more than $2 billion worth of digital assets tied to nefarious activity such as scams and darknet marketplaces. Despite this, the report says crime has fallen significantly:

“China’s transaction volume with illicit addresses has fallen drastically over the time period studied, both in terms of raw value and in relation to other countries. Much of the drop is due to the absence of large-scale Ponzi schemes like the 2019 PlusToken scam.”

Chainalysis added that, “While China remains one of the top-ranked countries for illicit transaction volume, it used to beat all others by a wide margin, suggesting that cryptocurrency-related crime in the country has fallen.”

The authors cite “historical transaction data” as suggesting that Chinese over-the-counter (OTC) Bitcoin brokers “have played an outsized role in facilitating money laundering for those involved in cryptocurrency-based crime.”

The report adds that the “vast majority” of illicit Chinese crypto flows have been associated with scam activity, although digital asset-based money laundering is still “disproportionately carried out in China.”

Chainalysis noted that China’s central government carried out more than 1,100 arrests associated with digital asset-based money laundering in June, indicating a willingness to crack down on the sector.

“It will be interesting to see whether the arrests lead to a drop in flows of illicit funds to China-based cryptocurrency businesses and OTC traders.”

Chainalysis speculates that China’s increasing moves to clamp down on traditional decentralized cryptocurrencies may undermine the nation’s status as a global crypto superpower moving forward.

The report attributes China’s renewed hostility toward decentralized crypto assets to its plans for widespread adoption of the digital yuan.

Related: China’s crackdown signals an oncoming crypto ban, Bobby Lee says