If Bitmain is sanctioned, will the U.S. Mining Rig system be the first to collapse?

The U.S. government has launched a security review of Beijing-based Bitcoin mining rig manufacturer Bitmain. This federal investigation, code-named “Operation Red Sunset,” has been ongoing for months and aims to determine whether Bitmain's mining rigs could potentially be remotely controlled or interfere with the U.S. power grid. Over the past decade, U.S. miners have installed hundreds of thousands of Bitmain mining rigs across the country, and the Bitcoin mining business in North America relies almost entirely on Antminer rigs. If Washington takes a tough stance, the maintenance supply chain will be the first to break.

The Inside Story of the Security Investigation of the Red Sunset Operation

According to documents reviewed by Bloomberg and informed sources, the “Red Sunset” operation has been ongoing for about two years across multiple agencies. The Department of Homeland Security is leading the effort, with support from the National Security Council. The investigation aims to determine whether Bitmain's mining rigs can be externally controlled, potentially for espionage or sabotage purposes. Federal law enforcement officials have begun inspecting hardware, and some of Bitmain's goods have been intercepted at U.S. ports, where they were disassembled at inspection stations to carefully check their chips and firmware for hidden functionalities.

Officials are not discussing this issue in isolation. The Senate Intelligence Committee's report has pointed out vulnerabilities in Bitmain's equipment, which are susceptible to manipulation from China. A few years ago, researchers discovered a remote shutdown vulnerability in Antminer firmware; Bitmain explained it at the time as an unfinished anti-theft feature and later released a patch, but the incident still left a stain.

The company stated in an email to Bloomberg that claims regarding its ability to remotely control machines from China are “absolutely false,” and stated that the company complies with U.S. laws and does not engage in any activities that threaten national security. The company also indicated that it is unaware of the investigation named “Red Sunset Operation,” which was previously related to the seizure of its hardware and concerns from the Federal Communications Commission, but “no anomalies were found.”

The “Red Sunset” is also located on a concrete pedestal. In 2024, the U.S. government ordered the shutdown of mining companies associated with China, citing national security risks from the presence of thousands of drilling machines near a missile base in Wyoming. The hardware facilities of the mine are similar to those of “Red Sunset”, but the geographical location is more sensitive. Therefore, the government views Bitmain not merely as a supplier, but as an infrastructure construction company, with its operations spanning near the power grid and sometimes even close to strategic locations.

The Deadly Dependence of American Mining Farms on Bitmain Mining Rigs

Over the past decade, American miners have installed hundreds of thousands of Bitmain mining rigs across the country. The Bitcoin mining business in North America relies almost entirely on Antminer rigs, and the chips and code used in these rigs were not designed with today's geopolitical tensions in mind. In March of this year, a smaller, lesser-known publicly traded company announced it would establish a new Bitcoin mining company, with Eric Trump and Donald Trump Jr. as its investors.

The new company named American Bitcoin Corp aims to become “the largest and most efficient pure Bitcoin miner in the world” and plans to operate 76,000 mining rigs in Texas, New York, and Alberta. To acquire such a large number of mining rigs, the company has chosen to partner with Bitmain. Company documents show that American Bitcoin has agreed to purchase 16,000 Bitmain mining rigs for $314 million. The company opted not to pay in cash or borrow funds, but instead used 2,234 Bitcoins as collateral to secure the hardware delivery.

This transaction can be seen as a microcosm of dependency issues. A well-known miner with close ties to the presidential family has staked thousands of Bitcoins and ambitious growth targets on a Chinese supplier currently under national security investigation. However, despite the president's sons wanting to invest heavily in Bitcoin mining, they are merely a drop in the bucket. So, when you ask “What would happen if Bitmain were impacted?” you are actually asking what would happen when a core supplier in that tech stack encounters federal policy (not just market risk).

Repair Supply Chain: The First Broken Fragile Link

Every serious Miner faces hardware issues. Fans can break, power supplies can burn out, and hashing boards can also fail. Some failures can be handled independently, but most need to be sent to authorized repair centers within the Bitmain ecosystem. The company has listed overseas and regional repair centers covering the US market, with transportation routes passing through places like Arkansas, North Dakota, and Oklahoma.

The pipeline is very fragile and is the most likely to break first. If the U.S. government chooses to take a tough stance, such as adding Bitmain or its major affiliates to the entity list or imposing targeted sanctions, the easiest point to target would be the border. Spare parts may be temporarily stored in a warehouse until they arrive at customs for “inspection.” What used to be a process that could be completed in a few days may now take weeks, as lawyers and compliance teams need time to study the new rules.

For a single mining site, this impact will manifest slowly. As more mining rigs are taken offline waiting for parts, availability will slightly decline, and the accumulation of faulty equipment on-site will continue to increase. Well-capitalized operators can certainly stockpile spare parts and purchase backup components from secondary suppliers to mitigate risks. However, smaller mining sites that have purchased a limited number of mining rigs through structured financing and have not stockpiled a large number of spare circuit boards will soon feel the real pressure.

Three-Stage Collapse of the Repair Supply Chain

Phase 1: Customs Delay (1-2 months): Spare parts are held up at border inspection, extending the delivery period from a few days to several weeks.

Stage Two: Spare Parts Exhaustion (3-6 months): The spare parts inventory of the mining site is depleted, and faulty mining rigs begin to accumulate.

Phase Three: Hashrate Decay (6-12 months): A large number of Mining Rigs are out of operation due to inability to repair, resulting in a significant decrease in hashrate at the mining site.

Next is the order delivery. If the “Red Sunset” plan ultimately adopts more moderate measures, such as increasing licenses for specific chips or enforcing export reviews, Bitmain may still be able to deliver S21 and T21 orders to the United States, although the speed will slow down. Miners who originally expected a six-week delivery may now face delivery times of three months or even longer. If the final outcome is more severe, and Bitmain is restricted from supplying certain U.S. buyers, then these orders are likely to shift from planned delivery to an unresolved issue.

Due to the large scale of financing in the industry, wasted time is not just a waste of time: it also includes time costs, interest, contractual terms, and equity guidelines. A publicly listed miner once promised investors that it would reach a specific hash rate in a certain quarter, yet now has to explain why the equipment is stuck somewhere between Shenzhen and Houston.

The explosion of the second-hand market and the capacity bottleneck of alternative suppliers

Once uncertainty arises in the supply of new Mining Rigs, the second-hand market will become active. Those old Antminers that were about to be retired will suddenly become hot commodities as long as their efficiency is not significantly different. The sales teams of Bitmain's main competitors, MicroBT and Canaan, will soon be overwhelmed with work. However, they do not have a “magic warehouse” filled with high-efficiency equipment either. They also face their own production bottlenecks, chip quotas, and delivery commitments. If American Miners attempt to transition on a large scale, the delivery cycle for alternative hardware will also be extended.

Some gaps will be filled through gray channels, such as purchasing Mining Rigs transported via third countries or from intermediaries that can still obtain Bitmain inventory without violating U.S. regulations. The emergence of this gray market will drive up prices, increase trading risks, and may introduce quality control issues. When Mining Rigs must be resold through multiple hands and routed through third countries, authenticity verification, warranty services, and after-sales support will become problematic.

Three Scenarios Pathways and Industry Impact Assessment

From an external perspective, it's easy for people to think in an either-or manner: either Bitmain is banned, or nothing happens. However, in reality, there are roughly three possible scenarios. In the first scenario, the “red sunset” quietly falls. The Department of Homeland Security continues to monitor closely and may propose some internal recommendations, ultimately leading the government to believe that existing industry security measures, network segmentation, and firmware audits are sufficient to manage the risks. Bitmain remains in a politically awkward position, but its products are still commercially viable.

In the second scenario, Bitmain will fall under regulatory scrutiny. This could mean that a formal mitigation agreement needs to be signed, requiring the company to meet strict firmware certification standards, undergo third-party audits, and restrict certain maintenance and assembly work to audited domestic partners. For miners, this version is more of a nuisance than a disaster. Delivery cycles will be extended, legal costs will rise, but hardware supply will continue.

The third path is what operators fear the most: sanctions or being placed on an entity list, which will directly affect sales, firmware support, and USD settlements. In this situation, Bitmain's equipment could pose a serious threat to regulated American buyers almost overnight. Maintenance centers find it difficult to transport parts across countries. Software updates fall into a legal gray area and cannot be carried out. Existing equipment can still operate, but its owners must seriously consider to what extent they are willing to continue relying on a supplier that cannot provide maintenance or upgrade services.

The computing power will not plummet suddenly, because Huawei is not in the core network. However, the growth plans will be adjusted. The original plan to integrate a large amount of computing power into the US power grid in the next two quarters will be postponed or shifted abroad. The statement that Bitcoin mining is becoming an industry dominated by the US and friendly to the power grid will no longer hold water.

is not only an industrial-level test for Twitter Mining

On the surface, this is a niche story about customs seizures, but in reality, it is a test of how the United States treats Bitcoin's physical infrastructure. Washington has determined that the site selection for mining operations is crucial, and Wyoming has suffered greatly due to the closure of a mining operation related to China nearby. Currently, Washington is investigating Bitmain's hardware, agents are dismantling Mining Rigs, and lawyers are debating whether Chinese-made ASIC chips should be classified as telecommunications equipment rather than gaming graphics cards.

If the government backs down or only imposes minor penalties, it indicates that the Bitcoin industry layer can withstand strict scrutiny while still operating in the global hardware market. However, if the government restricts Bitmain to a specific range, the message conveyed is entirely different. Miners would interpret it as the beginning of a broader initiative aimed at localizing or at least reducing the risks of a key component of mining stacking.

For others, the stakes are even higher. The budget for securing Bitcoin is paid for through these machines. As the costs of operating these machines in the United States increase, along with their complexity and political risks, this budget will be increasingly diverted elsewhere. The key question is which internal component of Bitmain's Mining Rig would fail first if it were attacked. Another less publicized issue is whether the United States hopes these Mining Rigs will continue to use the domestic power grid, or if it is more willing to send them back to the “backyard” of other countries.