U.S. Targets Bitmain Over Espionage Fears — But the Investigation Risks Crippling Its Own Bitcoin Mining Industry

The United States has opened a federal investigation into Bitmain, the Chinese giant that controls 80% of the Bitcoin mining hardware in America, literally shooting itself in the leg.

Crypto analysts are criticising the probe, saying it might backfire and bring more harm to America's own crypto sector.

The probe,dubbed as Operation Red Sunset and led by the Department of Homeland Security, is launching the investigation under the suspicion that Bitmain's ASIC mining machines could be remotely used for espionage and sabotaging purposes, notably on the power grid.

Bitmain has denied any allegations of misconduct, insisting that its equipment is unable to remote control and that it complies fully with U.S. regulations.

But regardless of the investigation’s outcome, the decision to scrutinize the company exposes a deeper contradiction in U.S. crypto policy: Washington is targeting the same Chinese hardware that its Bitcoin miners rely on almost exclusively to stay competitive.

Bitmain, together with fellow Chinese manufacturer MicroBT, controls around 97% of the global ASIC market. Bitmain alone holds over 80% share — a near-total dominance that has made its machines indispensable for large-scale Bitcoin mining operations in the United States.

This reliance is especially clear in the case of American Bitcoin, a mining firm backed by members of the Trump family. In 2025, the company purchased 16,000 Bitmain miners under unusually favorable financing terms, using the Chinese hardware to power its rapid expansion across U.S. energy hubs. Similar dependence exists across virtually every major mining operator in the country.

As a result, the federal probe effectively places the U.S. Bitcoin mining ecosystem in a precarious position. If Washington were to restrict, sanction, or ban Chinese ASICs, American miners would face immediate equipment shortages, higher operating costs, and a steep drop in global competitiveness.

Alternative suppliers — primarily emerging manufacturers in South Korea — currently lack the efficiency, scale, and price performance needed to replace Bitmain without inflicting major economic damage.

Analysts warn that the United States could unintentionally sabotage its own mining sector, forcing companies to consolidate in low-cost energy states like Texas while scrambling to source new technological solutions that may take years to mature.

Many miners privately argue that the investigation risks weakening America’s position in the global Bitcoin hash rate — effectively giving an advantage to competitors in regions less affected by geopolitical tensions.

The situation reveals a broader dilemma: the United States wants to secure its digital infrastructure, yet its crypto economy remains deeply intertwined with Chinese technology that it cannot easily replace.

As Washington weighs national security concerns against economic reality, the outcome of the Bitmain probe could reshape the future of American Bitcoin mining — and may determine whether the U.S. strengthens its crypto industry or unintentionally undercuts it.