Biden Cracks Down on Chinese Bitcoin Mine Near Nuclear Base, Shocking U.S. Firm’s Recent Purchase
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<p>CleanSpark recently lauded the advantages of acquiring a cryptocurrency mining site in Wyoming, only for the White House to announce that the ongoing operations posed a national security risk and must cease immediately.</p>
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<p>The company affirmed that it was not aware of this directive before finalizing the purchase but intends to proceed with the acquisition.</p>
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<p>This order represents the first instance of using the expanded authority over real estate transactions granted to CFIUS and the president.</p>
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<p>An American bitcoin mining company, CleanSpark (CLSK), found itself entangled in the U.S.-China political tension after acquiring mining sites located near a U.S. nuclear missile facility in Wyoming from MineOne, a company with Chinese ownership.</p>
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<p>On Monday, President Joe Biden mandated the shutdown of a bitcoin mining facility near Warren Air Force Base in Wyoming, citing national security concerns due to the use of foreign technology. The executive order highlighted that MineOne is predominantly owned by Chinese nationals, and all mining equipment on the site must be dismantled and removed from within a mile radius of the military base in Cheyenne, where Minuteman III intercontinental ballistic missiles (ICBMs) are housed.</p>
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<p>The timing of this order is particularly notable, as MineOne had sold the sites to CleanSpark less than a week before it was issued.</p>
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<p>On May 9, CleanSpark announced its acquisition of two mining sites for nearly $19 million in cash, with a 45-day closing period, without disclosing the seller. The company plans to utilize Bitmain’s latest generation of mining equipment from China and aims to expand the sites’ capacity from 75 megawatts (MW) to an additional 55MW.</p>
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<p>A representative for CleanSpark stated that the company was unaware of the executive order prior to purchasing the mining sites but recognizes the issues raised in the order and intends to move forward with the agreement.</p>
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<p>"The executive order and CFIUS involvement, both of which were unknown to us before signing the deal, have introduced unexpected complexities to the closing process, but we are navigating through these developments towards a satisfactory closing," the spokesperson said in a statement.</p>
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<p>"We respect the oversight process and are committed to ensuring our operations enhance national security and promote economic development, especially in Wyoming, which has been proactive in fostering a favorable environment for Bitcoin," the company added.</p>
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<p>Neither MineOne nor the attorneys at Loeb & Loeb who facilitated the transaction responded to requests for comment.</p>
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<p>The details of the $19 million transaction were thoroughly detailed in CleanSpark's filings with the Securities and Exchange Commission (SEC). The purchase hinged significantly on securing the substantial energy requirements essential for the operation.</p>
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<p>The larger of the two properties is approximately 4,000 feet from the nearest boundary of Warren Air Force Base.</p>
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<figcaption tabindex="0"><span>CleanSpark disclosed its plan to acquire MineOne’s Wyoming site just days before the White House ordered the operation to halt. (Documents from Securities and Exchange Commission)</span></figcaption>
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<p>From MineOne, the sale agreement was signed by Jiaming Li, identified as the company’s director. Li, who was unreachable for comment, has also served as the president of China Xiangtai Food Co., a partner at TCC Capital, and reportedly managed around $12 billion in assets at Sinatay Insurance Co.</p>
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<p>According to previous press releases, he holds a doctorate in economics from Fordham University. Li also briefly held the position of president at Bit Origin Ltd., a MineOne investor, and has previously faced similar scrutiny from Washington.</p>
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<h2>Compliance and Due Diligence</h2>
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<p>The contract disclosed in CleanSpark’s SEC filings highlighted a 15-day due diligence period starting from the deal signing on May 8, and the transaction could be canceled if MineOne failed to meet certain conditions, including "government compliance matters."</p>
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<figcaption tabindex="0"><span>(Jesse Hamilton)</span></figcaption>
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<p>"Having been deeply involved in national security affairs for nearly four decades, I understand the potential risks posed by various forms of encroachment on critical defense infrastructure," remarked Tom Wood, a CleanSpark board member and former senior U.S. Navy official, in a statement. "The presence of a Chinese-owned data processing facility near Warren, which houses portions of our ICBM force, is a legitimate concern as identified in the president's order."</p>
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<p>He expressed confidence in the Committee on Foreign Investment in the United States (CFIUS) process, calling it "impartial, data-driven, and non-arbitrary." He suggested that if the U.S. mining business could address the issues in the order, "it would represent a significant win-win for both the United States and CleanSpark."</p>
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<p>This use of CFIUS powers to halt an acquisition involving Chinese ties marks the eighth such instance - seven of which involve China, according to Hogan Lovells attorneys specializing in this area. Anne Salladin and Brian Curran noted that it was "the first presidential prohibition utilizing the expanded authority over real estate transactions granted to CFIUS and the president under the 2018 Foreign Investment Risk Review Modernization Act."</p>
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