- Texas and other US states have welcomed cryptocurrency miners.
- In 2021, China banned cryptocurrency miners, and some of them appear to have moved to the United States.
- A report from the New York Times shows the difficulties associated with monitoring international investments in the sector.
After China banned all crypto trading and mining in September 2021, bitcoin mining companies have increasingly turned their attention to places like rural areas of Nebraska, Wyoming, and especially Texas.
A recent New York Times report suggests that these cryptocurrency mines have worrying socio-economic implications.
A bitcoin mine in the town of Channing, Texas, population 281, is being sued for not paying workers. BitRush, also known as BytesRush, is owned by Jerry Yu, a 23-year-old NYU student, Chinese citizen and US resident.
Crypton Mining Solutions, another Texas-based crypto mining company, is also suing BitRush for failing to pay it for its services.
The lawsuits uncovered documents depicting how Chinese investors flocked to the United States, spending hundreds of millions of dollars to build and operate crypto mines, according to the Times.
Thanks to its cheap energy and pro-cryptocurrency legislation, Texas has become a hub for cryptocurrency mining facilities: large warehouses full of computers “mine” digital currencies like bitcoin Round the clock.
Chinese investors who set up shop in the United States can use these mines to generate cryptocurrencies and then exchange them for dollars online.
Mines and equipment are often purchased using cryptocurrencies, making it impossible to trace the origin of these funds, according to the Times, which adds that the lack of visibility allows investors to circumvent the oversight of US regulators and restrictions on money going out of China.
In the lawsuit, Crypton Mining Solutions accused Bitrush investors of being “not only Chinese citizens, but also citizens in highly political and influential business positions,” the Times reported.
Yu deferred for comment to his lawyer, who told the Times via email that the allegations against him were “baseless.”
However, further investigation by the newspaper showed that the people who signed the mortgage on Yu’s Manhattan apartment matched the names of a married couple who own shares in Chinese companies worth more than 100 million dollars.
Documents obtained by the Times suggest that the two men, Yu Hao and Sun Xiaoying, potentially Yu’s parents, could also be investors and directors of BitRush.
Yu’s attorney would not confirm to the Times these individuals’ relationship to Yu, nor the identities of the shareholders.
The flow of money from Chinese businesses and citizens to these companies cannot be traced because it occurred via crypto transactions that were not required to comply with U.S. regulations at the time, the Times.
This is not the first time a crypto mining company has come under scrutiny due to its ties to China and potential security risks.
Pentagon officials began monitoring a Bitcoin operation in Wyoming in October. Mine owners’ ties to China pose threat to national security, says The New York Times.
The mine is located across the street from a Microsoft data center and a nearby military base.
In September 2022, the White House released a statement claiming that the United States now had the largest bitcoin mining industry in the world and was responsible for 38% of global bitcoin activity, an increase of 34.5%. compared to 2020.
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