If Bitmain is sanctioned, which American mining company will fall first?

The U.S. government is conducting a stress test on Bitmain, with the first victims likely to be domestic mining farms.

Written by: Andjela Radmilac

Translated by: Chopper, Foresight News

The U.S. government has launched a security review of Bitmain, the Beijing-based manufacturer that dominates the global bitcoin mining machine market. A federal investigation, codenamed "Operation Red Sunset," has been ongoing for months, focusing on whether Bitmain’s miners can be remotely controlled for espionage or to disrupt the U.S. power grid. While this issue may seem abstract, as if it only exists in classified memos, the answer is closely tied to everyday scenarios: workbenches in North Dakota, freight yards in Oklahoma, and the upgrade schedules of every miner relying on Chinese hardware.

To understand the potential chain reactions that may follow, one must first grasp the true intentions of the U.S. government.

Decoding "Operation Red Sunset"

According to documents reviewed by Bloomberg and sources familiar with the matter, "Operation Red Sunset" has been advancing across multiple government agencies for about two years, led by the Department of Homeland Security and supported by the National Security Council. The core objective of the investigation is to determine whether Bitmain’s miners can be externally controlled and thus used for espionage or deliberate sabotage.

Federal law enforcement officials have already taken action against Bitmain hardware. Some miners have been intercepted at U.S. ports, dismantled on inspection tables, and both chips and firmware have been checked for hidden functions. Officials have also reviewed tariff and import issues, combining security concerns with routine trade enforcement.

In an email statement to Bloomberg, Bitmain said, "The claim that the company can remotely control miners from China is completely untrue," emphasizing its compliance with U.S. law and that it does not engage in any activities that threaten national security. The company also stated it was unaware of any investigation called "Operation Red Sunset," and that previous hardware detentions were related to reviews by the Federal Communications Commission (FCC), with "no anomalies found."

The U.S. government’s concerns are not unfounded. A report from the Senate Intelligence Committee has labeled Bitmain equipment as "high-risk assets susceptible to Chinese control." Years ago, researchers discovered a remote shutdown function in Antminer firmware; Bitmain explained it as an "unfinished anti-theft feature," which was later patched, but the incident left lingering security concerns.

The advancement of "Operation Red Sunset" is also based on a concrete case. In 2024, the U.S. government forced the closure of a mining project in Wyoming near a missile base that was linked to Chinese capital, citing national security risks posed by thousands of miners deployed at the site. The hardware used was similar to Bitmain products, and the location was highly sensitive.

Therefore, the U.S. government sees Bitmain as far more than just an equipment supplier; it is viewed as an "infrastructure participant close to the power grid and, in some cases, near strategic locations." This explains why a dedicated integrated circuit manufacturer would appear alongside telecom and power equipment companies in national security documents.

All of this is happening as Bitmain deepens its cooperation with a highly influential U.S. client.

The U.S. Mining Industry Can’t Do Without Bitmain

In March 2025, a small, relatively unknown listed company announced the spin-off of a new bitcoin mining business, with Eric Trump and Donald Trump Jr., sons of former President Trump, as investors. The new company, American Bitcoin, aims to become "the world’s largest and most efficient pure bitcoin mining company," planning to deploy 76,000 miners in Texas, New York, and Alberta, Canada. To achieve this ambitious goal, the company chose Bitmain as its core supplier.

Corporate documents show that American Bitcoin has agreed to purchase 16,000 Bitmain miners for $314 million. Instead of cash or traditional debt financing, the company pledged 2,234 bitcoins as collateral for the hardware. A former U.S. Securities and Exchange Commission (SEC) enforcement lawyer told Bloomberg that this deal structure is unusual and that the terms should be disclosed in more detail.

This transaction epitomizes the "dependency dilemma" of the U.S. mining industry: a mining company closely tied to the presidential family and under intense scrutiny is staking thousands of bitcoins and ambitious growth goals on a Chinese supplier under national security investigation. U.S. officials worry that such a partnership could create conflicts of interest for the current administration, which aspires to make the U.S. the "global center of cryptocurrency."

However, even if the Trump sons’ mining project plans to deploy massive computing power, it is just a "drop in the ocean" in the broader U.S. mining industry. Over the past decade, American miners have deployed hundreds of thousands of Bitmain machines nationwide. Bitcoin mining in North America is almost entirely dependent on Antminers.

Thus, when we ask, "What happens if Bitmain is impacted?" we are essentially exploring how the entire ecosystem will withstand pressure if its core supplier is hit by federal policy.

If the U.S. Government Takes Tough Measures, Who Will Collapse First?

Every mature mining company faces equipment wear and tear: fan failures, burnt-out power supplies, and frequent hash board damage. Some issues can be handled internally, but most require authorized repair centers within the Bitmain ecosystem. Bitmain has overseas and regional repair centers covering the U.S. market, with logistics channels throughout Arkansas, North Dakota, Oklahoma, and other states.

This repair and spare parts supply system is extremely fragile and most likely to collapse first. If the U.S. government takes tough measures, such as adding Bitmain or its key affiliates to the Entity List or imposing targeted sanctions, the easiest action would be interception at the border. Spare parts could be held in temporary warehouses awaiting customs inspection; processes that once took days could be extended to weeks as lawyers and compliance teams adapt to new rules.

For individual mining companies, the impact will gradually become apparent: more miners will be idled due to lack of parts, equipment availability will decline slightly, and piles of faulty equipment will accumulate at mining farms. Well-funded mining companies can stockpile parts or shift procurement to secondary suppliers, but small miners will quickly face immense pressure.

The next to be hit will be large order deliveries.

If "Operation Red Sunset" ends with moderate measures, such as adding license requirements or mandatory export reviews for certain chips, Bitmain may still deliver S21 and T21 series miners to the U.S. market, but delivery times will be extended. What was once a six-week delivery could stretch to three months or longer, accompanied by cumbersome paperwork. If the outcome is harsher and Bitmain is restricted from supplying certain U.S. buyers, planned orders will shift from "confirmed capacity" to "uncertainty."

Because the mining industry is highly dependent on financing, time delays are not just simple postponements: they mean extra interest expenses, risks of breaching loan covenants, and failure to deliver promised equity returns to shareholders. A listed mining company that has promised investors "a certain computing power scale by a specific quarter" will have to explain why equipment is still stuck in transit from Shenzhen to Houston.

Once new equipment supply becomes uncertain, the second-hand miner market will heat up rapidly. Old Antminers that were about to be retired will suddenly become attractive as long as their efficiency is not significantly outdated. Bitmain’s main competitors—MicroBT and Canaan—will see their sales teams instantly become busy.

But these competitors do not have magical warehouses full of high-efficiency miners; they also face production bottlenecks, chip quota restrictions, and pressure from already committed orders. If U.S. miners collectively turn to alternative suppliers, delivery times for these alternatives will also lengthen. Some supply gaps may be filled through gray channels, such as miners being rerouted through third countries or purchased from intermediaries who can still access Bitmain inventory without violating U.S. rules.

Three Possible Future Scenarios

From an external perspective, people tend to think in binary terms: either Bitmain is banned, or nothing happens. In reality, there are three possible scenarios.

The first scenario is that "Red Sunset" quietly ends, with the Department of Homeland Security continuing to monitor and perhaps submitting some internal recommendations, but the government ultimately decides that current industry security measures, network isolation, and firmware audits are sufficient to manage the risks. Bitmain still faces political embarrassment but can continue supplying the U.S. market commercially. Mining companies will further diversify procurement with MicroBT and Canaan, but the overall structure of the U.S. mining industry remains unchanged, and computing power growth stays on its current trajectory.

In the second scenario, Bitmain is brought under regulatory oversight. This may require a formal mitigation agreement, demanding Bitmain meet strict firmware certification standards, undergo third-party audits, and have certain repair and assembly work done by vetted U.S. partners. Exports may require additional licenses, and high-risk areas (such as mining farms near sensitive power grid infrastructure or military facilities) may face special restrictions.

For mining companies, this scenario is troublesome but not catastrophic. Delivery times will lengthen, legal costs will rise, and engineers will spend more time proving compliance with new U.S. government security standards. But hardware supply will continue, albeit with increased friction costs and higher overall deployment costs per unit of computing power.

The third path is the one miners fear most: sanctions or being added to the Entity List, which would directly impact sales, firmware support, and dollar settlements. Overnight, Bitmain equipment would become a nightmare for regulated U.S. buyers: repair centers would struggle to ship parts across borders, and software updates would fall into a legal gray area. Existing miners could still operate, but companies would have to seriously consider whether to rely long-term on a supplier unable to provide service or upgrades.

Bitcoin’s computing power will not collapse—after all, Bitmain is not Huawei and has not penetrated the core U.S. network. But growth plans will be hindered: a large amount of computing power that was supposed to connect to the U.S. grid in the next two quarters will be delayed or shifted overseas, and the narrative that "bitcoin mining is becoming a U.S.-led, grid-friendly industry" will no longer hold water.

Why Does This Event’s Impact Go Far Beyond Mining?

On the surface, this is a niche story about customs seizures, but in essence, it is a test of the U.S. government’s attitude toward bitcoin’s physical infrastructure.

The U.S. government has already highlighted the sensitivity of mining locations (such as the closure of a Wyoming mining farm near a missile base); it is conducting real-time investigations into Bitmain hardware, with agents dismantling miners and lawyers debating whether Chinese ASICs should be classified as "telecom equipment" or "graphics cards"; meanwhile, the presidential family’s mining project is deeply tied to this supplier through contracts.

If the U.S. government backs down or imposes only mild penalties, the signal is: while the bitcoin industry faces strict scrutiny, it can still operate normally in the global hardware market. If Bitmain is brought under restrictions, the signal is entirely different: mining companies will interpret it as the beginning of "localization or de-risking of the core mining industry."

For other participants, the risks are even deeper. The "cost budget" for securing bitcoin is borne by these miners. If operating this equipment in the U.S. becomes more expensive, complex, and politically risky, that budget will shift to other regions.

The core question is, if Bitmain is hit, which part of the U.S. mining industry will collapse first? And more fundamentally, does the U.S. want these miners roaring in its own grid, or would it rather push them abroad?