CleanSpark (CLSK), an American bitcoin mining company, found itself entangled in the U.S.-China political tensions after acquiring mining sites in Wyoming, near a U.S. nuclear missile base. On Monday, President Joe Biden ordered the suspension of operations at a bitcoin mining facility close to Warren Air Force Base, citing national security threats due to the use of foreign-sourced technology. The facility, previously owned by MineOne—a company with Chinese ties—was deemed a risk as it was within close proximity to military installations housing Minuteman III intercontinental ballistic missiles (ICBMs).
Surprising Timing of the Order
The timing of the order is noteworthy, coming less than a week after MineOne sold the sites to CleanSpark for nearly $19 million in cash. CleanSpark announced the acquisition on May 9, specifying that they intended to deploy Bitmain’s latest generation mining machines and expand the sites’ capacity by an additional 55 megawatts (MW) from the current 75MW. However, CleanSpark was unaware of the impending executive order when they finalized the purchase.
CleanSpark’s Response to the Order
A spokesperson for CleanSpark acknowledged the concerns raised by the executive order and expressed the company’s commitment to national security and economic development in Wyoming. The spokesperson stated, “The executive order and the involvement of CFIUS, both of which we were unaware of before signing the deal, has added an unexpected layer to the closing process, but we are working through these developments toward a satisfactory closing.”
CleanSpark emphasized its respect for the oversight process and dedication to ensuring that its operations benefit Wyoming, a state known for its pro-Bitcoin stance.
Background of the Deal and Security Concerns
The deal, detailed in Securities and Exchange Commission (SEC) filings, was contingent on securing the significant energy needed for the mining operations. The larger of the two properties is about 4,000 feet from the edge of Warren Air Force Base.
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Jiaming Li, MineOne’s director and signatory of the sale agreement, has a complex background, having held significant positions in various companies with substantial Chinese connections. Li’s previous roles included president of China Xiangtai Food Co. and Bit Origin Ltd., and he reportedly managed $12 billion in assets at Sinatay Insurance Co. His involvement added to the scrutiny from Washington, given his extensive ties to Chinese businesses.
The executive order underscores the heightened sensitivity and national security concerns surrounding foreign involvement in critical infrastructure, especially near military installations. CleanSpark’s acquisition, while aimed at expanding its bitcoin mining capacity, now faces significant hurdles as it navigates the complexities introduced by the U.S. government’s security concerns.
