If Bitmain suffers a major setback, what will be the first to collapse in the U.S. mining industry?
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If Bitmain suffers a major setback, what will be the first to collapse in the U.S. mining industry?
Washington is putting Bitmain through a stress test, and the first failures will appear at mining facilities in the U.S., not on Wall Street terminals.
Navigating Web3 tides with focused insightsBy: Andjela Radmilac
Translated by: Chopper, Foresight News
The U.S. government has initiated a security review of Bitmain, the Beijing-based manufacturer that dominates the global bitcoin mining hardware market. A federal investigation known as "Operation Red Sunset" has been ongoing for months, focusing on whether Bitmain's miners could be remotely controlled for espionage or to disrupt the U.S. power grid. This concern may seem abstract, confined to classified memos, but its implications touch numerous ordinary scenarios: repair benches in North Dakota, freight yards in Oklahoma, and every miner’s upgrade schedule relying on Chinese hardware.
To understand the potential ripple effects, one must first grasp the U.S. government's true intentions.
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 (DHS) with support from the National Security Council. The core objective is to determine whether Bitmain's mining hardware can be externally manipulated—potentially enabling espionage or deliberate sabotage.
Federal law enforcement officials have already taken action against Bitmain hardware. Some miners were intercepted at U.S. ports and disassembled for inspection, with chips and firmware scrutinized for hidden functionalities. Officials have also examined tariff and import compliance issues, combining national security concerns with standard trade enforcement.
In a statement to Bloomberg, Bitmain said claims that the company could remotely control miners from China are "entirely false," emphasizing its compliance with U.S. laws and denial of any involvement in activities threatening national security. The company added it was unaware of any investigation named "Operation Red Sunset," noting previous seizures related to reviews by the Federal Communications Commission (FCC), which ultimately found "no abnormalities."
U.S. concerns are not baseless. A Senate Intelligence Committee report labeled Bitmain equipment as "high-risk assets susceptible to Chinese influence." Years ago, researchers discovered remote shutdown capabilities embedded in Antminer firmware; Bitmain described this at the time as an unfinished anti-theft feature. Though later patched, the incident left lingering security doubts.
"Operation Red Sunset" is further grounded in a concrete case. In 2024, the U.S. government forced the closure of a cryptocurrency mining operation near a missile base in Wyoming linked to Chinese capital. Thousands of miners deployed at the site were deemed a national security risk due to their similarity to Bitmain products and the location's strategic sensitivity.
Thus, the U.S. government views Bitmain not merely as a hardware supplier, but as an "infrastructure participant positioned close to the power grid and partially near strategic sites." This explains why an ASIC manufacturer appears alongside telecom and power equipment firms in national security-related documents.
All this unfolds as Bitmain deepens collaboration with a highly influential U.S. client.
American Mining Cannot Do Without Bitmain
In March 2025, a small, relatively unknown publicly traded company announced the spin-off of a new bitcoin mining venture, with Eric Trump and Donald Trump Jr.—sons of former U.S. President Donald Trump—listed as investors. The newly formed entity, American Bitcoin, aims to become the "world’s largest and most efficient pure-play bitcoin mining company," planning to deploy 76,000 miners across Texas, New York, and Alberta, Canada. To achieve this ambitious goal, the company has chosen Bitmain as its core supplier.
Corporate filings show American Bitcoin has agreed to purchase 16,000 Bitmain miners for $314 million. Instead of cash or traditional debt financing, the company secured the hardware using 2,234 bitcoins as collateral. A former enforcement attorney at the U.S. Securities and Exchange Commission (SEC) told Bloomberg this transaction structure is unusual and should involve more detailed disclosure of terms.
This deal epitomizes the "dependency dilemma" within the U.S. mining industry: a high-profile mining enterprise closely tied to the presidential family is betting thousands of bitcoins and aggressive growth targets on a Chinese supplier currently under national security investigation. U.S. officials worry such partnerships could create conflicts of interest for an administration aiming to make the U.S. a "global cryptocurrency hub."
Yet even with the Trump sons' project planning massive computational power, it remains a mere drop in the ocean compared to the broader U.S. mining sector. Over the past decade, American miners have deployed hundreds of thousands of Bitmain machines nationwide. North America's bitcoin mining operations are almost entirely dependent on Antminers.
Therefore, when we ask, "What happens if Bitmain is disrupted?" we are essentially exploring how the entire ecosystem would bear pressure when its central supplier faces federal policy action.
If the U.S. Government Takes Hard Measures, Who Will Collapse First?
Every mature mining operation grapples with equipment wear: fan failures, burnt-out power supplies, and damaged hashboards are common. Some repairs can be handled internally, but most require authorized service centers within Bitmain’s ecosystem. Bitmain operates overseas and regional repair hubs serving the U.S. market, with logistics channels spanning Arkansas, North Dakota, Oklahoma, and beyond.
This maintenance and spare parts supply chain is extremely fragile—and most likely to collapse first. If the U.S. government takes strong measures, such as placing Bitmain or key affiliates on the Entity List or imposing targeted sanctions, the easiest enforcement point is border interception. Spare parts could be held in temporary warehouses awaiting customs review; processes that once took days might stretch into weeks due to legal and compliance teams adapting to new rules.
For individual mining companies, the impact would unfold gradually: more miners idled due to lack of parts, slight declines in equipment uptime, and growing piles of faulty hardware at mining sites. Well-funded operators might stockpile components or shift procurement toward secondary suppliers, but smaller miners would quickly face severe strain.
Next in line for disruption are large-scale equipment deliveries.
If "Operation Red Sunset" concludes with milder measures—such as requiring licenses for specific chips or mandatory export reviews—Bitmain might still deliver S21 and T21 series miners to the U.S., though delivery timelines would lengthen. What was expected in six weeks could stretch to three months or longer, accompanied by burdensome paperwork. If the outcome is harsher—such as restrictions on selling to certain U.S. buyers—previously confirmed orders would shift from "secured capacity" to "uncertain variables."
Given the mining industry's heavy reliance on financing, time delays are far more than simple setbacks: they mean higher interest costs, risks of breaching loan covenants, and failure to meet equity return commitments to shareholders. A public mining firm that promised investors "achieving X exahash by Q3" would have to explain why its equipment remains stuck en route from Shenzhen to Houston.
Once uncertainty hits new equipment supply, the secondhand miner market will heat up rapidly. Older Antminers nearing retirement—but still competitive in energy efficiency—will suddenly become attractive. Sales teams at Bitmain’s main rivals—MicroBT and Canaan Creative—will instantly find themselves swamped.
But these competitors don’t possess magical warehouses full of efficient miners either. They face production bottlenecks, chip allocation limits, and backlogs of committed deliveries. If U.S. miners collectively pivot to alternative suppliers, those alternatives’ lead times will also extend. Some supply gaps may be filled through gray-market channels—such as miners rerouted via third countries, or sourced from intermediaries who still hold Bitmain inventory and operate outside U.S. jurisdiction.
Three Possible Futures
From the outside, people tend to view this situation in binary terms: either Bitmain gets banned, or nothing changes. In reality, three distinct outcomes are possible.
In the first scenario, "Operation Red Sunset" quietly fades. DHS continues monitoring, perhaps issuing internal recommendations, but ultimately concludes existing industrial safeguards—network isolation, firmware audits—are sufficient to manage risks. Bitmain remains politically awkward but commercially able to sell to the U.S. Miners may diversify purchases toward MicroBT and Canaan, but the overall structure of the U.S. mining industry remains intact, with hash rate growth continuing largely on its current trajectory.
In the second scenario, Bitmain enters regulated status. This could involve a formal mitigation agreement requiring strict firmware certification standards, third-party audits, and shifting certain repair and assembly work to vetted U.S.-based partners. Exports might require additional licenses, and special rules could apply to high-risk zones—such as mining sites near sensitive power infrastructure or military installations.
For mining firms, this path would be troublesome but not catastrophic. Delivery delays and rising legal costs would occur, and engineers would spend more time proving compliance with new U.S. security requirements. But hardware supply would persist, albeit with increased friction and higher total deployment costs per unit of hash rate.
The third path is what miners fear most: sanctions or inclusion on the Entity List, directly impacting sales, firmware support, and dollar settlements. Overnight, Bitmain equipment would become a nightmare for regulated U.S. buyers: cross-border spare part shipments blocked, software updates in legal gray zones. Existing miners could keep running, but operators would need to seriously consider whether they want to rely long-term on a supplier unable to offer service or upgrades.
Bitcoin hash rate won’t collapse—after all, Bitmain isn’t Huawei, deeply embedded in core U.S. networks. But expansion plans will stall: vast amounts of computing power scheduled to come online in the U.S. over 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 lose credibility.
Why the Impact Extends Far Beyond Mining
On the surface, this seems like a niche story about customs seizures. At its core, however, it represents a test of the U.S. government’s stance on the physical infrastructure of bitcoin.
The government has already demonstrated awareness of mining site sensitivities—the shutdown of a Wyoming mine near a missile base proves that. It is now conducting real-time investigations into Bitmain hardware, with agents disassembling miners and lawyers debating whether Chinese-made ASICs should be classified as "telecom equipment" or "gaming GPUs." Meanwhile, the president’s family is contractually bound to this very supplier through their mining venture.
If the U.S. backs down or imposes only mild penalties, the signal is clear: while the mining layer faces scrutiny, it can still function normally within the global hardware marketplace. But if Bitmain is placed under restrictions, the message shifts dramatically: miners will interpret this as the beginning of "domestic localization or de-risking of core mining operations."
For other participants, the risks run deeper. The cost of securing bitcoin—the network’s security budget—is borne by these miners. If operating them in the U.S. becomes more expensive, complex, and politically risky, that spending will migrate elsewhere.
The fundamental question is this: if Bitmain is hit, which part of the U.S. mining industry will break first? And more profoundly, does the U.S. want these machines humming within its own power grid—or would it prefer to push them offshore?
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