The other side of American AI: Working for Chinese Bitcoin miners

Author:Lin Wanwan

At the end of 2025, Bitmain, a Chinese encryption equipment company, was added to the U.S. national security review list.

On November 21, the U.S. Department of Homeland Security launched Operation Red Sunset, citing national security concerns, to put Bitmain under scrutiny. The charges were pointed at its core: investigating whether its equipment contained remote backdoors and whether it could deliver a fatal blow to the U.S. power grid in an extreme situation.

Why would a Chinese mining company be accused of potentially endangering the U.S. power grid?

This reflects America's extreme anxiety about core resources. Because at this moment, Silicon Valley is witnessing the most expensive "silence" in technological history. In AI data centers, tens of thousands of Nvidia H100 GPUs lie quietly gathering dust on the floor. These chips, priced at $30,000 each and hailed as "industrial gold" by Jensen Huang, should be running at full speed, powering GPT-5 or Sora, but at this moment—they have no electricity. Humanity's most valuable asset is currently being held back by the most fundamental physical bottlenecks. The United States is experiencing a power shortage of an incomprehensible degree. The shortfall is 44 gigawatts, equivalent to the entire power capacity of a moderately developed country like Switzerland. In this supposedly technologically advanced nation, the average waiting time to power a newly built AI data center has stretched to over 48 months. The US power grid is like a frail old man. Just when AI giants were desperately searching for a way to access their billions of dollars, they discovered their lifeline had appeared in the very place they had previously overlooked—Bitcoin mining farms. Wall Street suddenly realized: what these people held in their hands was the scarcest asset of the AI ​​era—a massive amount of electricity already contracted with energy companies. But they are realizing that this survival rule of "computing power equals electricity" was already perfectly demonstrated by a group of Chinese engineers a decade ago on the other side of the ocean. Because the first "electricity training ground" now built for the US in the AI ​​era was completed in China ten years ago, and then moved to the US three years ago due to a ban. The rivalry between the two sides of the Pacific Ocean, seemingly accidental, conceals an inevitability. Just as the tide of history cannot be reversed, each generation has its own destiny, and every footnote tells us: greatness cannot be planned. History always tends to write down the answers first, then wait for the one who asks the question to appear. In June 2024, US Bitcoin mining company Core Scientific announced a shocking piece of news on Wall Street: they signed a $3.5 billion agreement with CoreWeave, a company touted as Nvidia's "son," to lease its power infrastructure, originally used for Bitcoin mining, to the latter for training AI models. These news items caused a sensation in Silicon Valley, dubbed the "marriage of computing power." However, on the other side of the Pacific in China, for the miners and officials who personally experienced the "5.19" storm, these news items evoked a different kind of feeling. Because the infrastructure used by mining companies like Core Scientific, IREN, and Cipher to house Nvidia's H100 processors is largely rooted in Chinese technology. To some extent, the first layer of "power defenses" in the US AI era is a complete inheritance of the industrial legacy following the massive shift of computing power from China. The person who unintentionally drew the blueprints was named Zhan Ketuan. Zhan Ketuan, a typical STEM graduate of the Institute of Microelectronics, Chinese Academy of Sciences, was originally destined to write code, draw circuit diagrams, and become a quiet, high-level tech expert in a science park. Until 2013, Zhan Ketuan and Wu Jihan founded Bitmain. It is said that Jihan Wu only spent two hours reading the Bitcoin white paper. He may not understand the future of currency, but he understood the essence behind the mathematics—it's an arithmetic game about hash collisions. In 2016, Bitmain made a decision that shocked the industry: it poured massive wafer orders into TSMC. The Antminer S9, equipped with TSMC's most advanced 16nm FinFET process, emerged, not only a production capacity miracle in chip history but also creating an unprecedented "thermodynamic furnace." In Zhan Ketuan's eyes, the S9 is a chip; but in the eyes of the State Grid, it is a pure industrial load. Unlike a factory that operates day and night, it doesn't fluctuate with temperature. It operates 24 hours a day with a smooth, linear power curve, unaffected by voltage or origin. From that moment on, a new system was born in the world: Electricity, from a public service, became a "B-end raw material" that could be priced, traded, and monetized instantly; Electricity, an energy source that is difficult to store at low prices once generated, parasitized its value in strings of numbers in another form; Bitcoin mining began to become an industry: From hydropower in the mountains of Sichuan to wind power on the grasslands of Inner Mongolia, Bitcoin mining machines operate on every piece of land in China with surplus electricity. Jihan Wu may not have realized at the time that the industrial standards he defined for Bitcoin mining machines inadvertently provided a perfect energy supply solution for the extremely thirsty US AI a decade later. In the most frenzied year of 2018, Bitmain alone swallowed 74.5% of the global market share. But that's not the most terrifying part; the most terrifying part is that the remaining market share was also entirely taken by the Chinese. Whether it's Whatsminer, founded by Yang Zuoxing, former chief chip designer of Bitmain, or Canaan Technology, the pioneer of ASICs, they are all Chinese companies. This isn't a global competition, but a "civil war among Chinese engineers" spanning 2000 kilometers: from Beijing's Haidian District's Aobei Science Park to Shenzhen's Nanshan District's Zhiyuan Park, 99% of the world's computing power is pulsating with Chinese rhythms. It's an absolute closed loop completely locked by the Chinese supply chain, one that Silicon Valley can only look up to.

Until May 2021, with a regulatory ban, the roaring sound that had lasted for years along the Dadu River came to an abrupt end.

For the country,This marked the end of an energy-intensive industry; but for the industry, it marked the beginning of an epic "technology migration".

Thousands of containers were loaded onto cargo ships and sailed across the ocean, carrying not only the latest generation of Antminer miners designed by Jihan Wu, but also a unique "electricity survival philosophy" honed in China. One of the destinations: Texas, USA. Here, there is an independent ERCOT power grid, boasting the freest and wildest electricity trading market in the United States. For these "computing refugees" from the East, this is practically a magnified version of Sichuan and Inner Mongolia. However, when this group of Chinese people actually arrived in the US, the energy sector was astonished to discover: these weren't refugees, they were clearly a well-equipped "energy special forces." Back in Sichuan, mine owners secured low-priced electricity by cultivating relationships with power plant managers through drinking and socializing, signing agreements based on personal connections. However, in Texas, this logic was quickly transformed into high-frequency trading algorithms. Electricity prices in Texas fluctuate in real time, changing every 15 minutes, and in extreme cases can spike from 2 cents to $9. Traditional Silicon Valley data centers (such as Google and Meta) avoid such volatility like the plague, accustomed to being sheltered by fixed rates. But what was the reaction of Jihan Wu's "disciples"? Excitement. They transformed their experience from manually controlling power on/off cycles in China into an automated demand response program. When electricity prices are negative (as is the case in Texas when there's an overabundance of wind power), they operate at full power, consuming vast amounts of electrons, to the point that the grid has to pay them to use the electricity. When heat waves hit and electricity prices soar, they can cut off hundreds of megawatts of load within seconds, "selling" the electricity back to the grid and earning a much higher price difference than mining. This "energy arbitrage" method left even veteran American power traders dumbfounded. Riot Platforms and Marathon, these mining giants in the US, thrive and are able to shift towards AI data centers precisely because of this "power algorithm" brought from China. Another major legacy of the Jihan Wu era is the relentless pursuit of speed in physical infrastructure construction. The traditional construction cycle for US data centers is 2-3 years, a period dedicated to the meticulous work of elite engineers. But the mining industry doesn't buy into this logic. Their logic is: every second of downtime is a crime against profits. Thus, in the Texas wilderness, a "Chinese speed" emerged that left local builders speechless: No elaborate glass curtain walls, no complex central air conditioning, only massive industrial fans roaring. This "modular, containerized, minimalist cooling" infrastructure solution compressed the construction period to 3-6 months. This rugged yet extremely efficient engineering capability, initially ridiculed as an "electronic junkyard" in Silicon Valley, has now become highly sought after—because the explosion of AI computing power is too rapid, and OpenAI and its ilk cannot afford to wait three years; they need this "plug-and-play" infrastructure capability now. Clearly, in Silicon Valley, you can buy graphics cards with money, but you can't buy time. These "times" are the legacy of the frenzy of ten years ago. Back then, in order to mine Bitcoin, Chinese miners and their successors frantically acquired land and built substations in the United States, accumulating what is now priceless "grid-connected capacity." Electricity quotas are the new hard currency of American capital. The so-called 'inheritance' is not inheriting that pile of scrap silicon wafers, but inheriting the right to connect to the power grid. The reason mining companies were able to secure multi-million dollar contracts is simply because, amidst the nationwide power shortage in the US, they held the key to unlocking the AI ​​era. The Migration Night of "Hidden Champions" These brutal pleasures will ultimately end in brutality. 2018 was a subtle watershed year in business history. That year, Sam Altman, the founder of ChatGPT, was still struggling to keep his non-profit organization afloat; Elon Musk had just recovered from near bankruptcy, and in their eyes, computing power was merely docile servers in a data center. But across the ocean, Jihan Wu and his Bitmain had already transformed computing power into an industrial behemoth. They didn't understand the future of AI, but that didn't stop them from holding the key to it: how to tame those greedy silicon chips, measured in gigawatts. This is a story about a self-made hero, national will, and a historical irony. For seven years, China tacitly allowed and nurtured a behemoth that devoured electricity amidst the torrents and coal seas of its west; then, on a summer night in 2021, for the sake of greater financial security and dual-carbon goals, it uprooted it entirely. To understand why the US today so readily bows to mining companies in its embrace of AI's electricity boom, one must understand the "energy training exercise" that took place ten years ago on the banks of the Dadu River in Sichuan, China. Let's rewind to August 2019. That was Bitmain's most glorious period, and a brief window of opportunity for China's mining industry to "turn from gray to white." At that time, in order to solve the long-standing problem of "water wastage during the high-water season" (i.e., water generated for electricity but unable to be transmitted, and simply released), the Sichuan Provincial Government introduced a policy called "Hydropower Consumption Demonstration Zone." This is a genuine official document from Ganzi and Aba in Sichuan. According to a Caixin report at the time, under this policy, Jihan Wu's mining machines were no longer "illegal" operations hidden deep in the mountains, but rather became important players in helping local power grids "shaving off peak loads and filling valleys." Bitmain at the time effectively acted as a "supercapacitor" for China's western energy network. What Jihan Wu was most proud of was not only his 7nm chips, but also this ability to instantly convert excess electricity into digital assets. At that time, China controlled 75% of the world's Bitcoin computing power. From Wall Street to the City of London, everyone wanting to participate in this game had to defer to Jihan Wu and rely on the electricity load of Sichuan and Xinjiang, China. However, behind this "grayscale prosperity" always hung two swords of Damocles. The first was "financial security." Regulators have long recognized that this is not merely technological innovation, but also a massive financial channel operating outside of foreign exchange controls. The second measure is "dual control of energy consumption." With the introduction of the "3060 dual carbon" target in 2020, the flow of every kilowatt-hour of electricity has become a political calculation. Mining, an industry characterized by "high energy consumption, low employment, and no tangible output," is destined to be sacrificed on the scales of macro-strategy. The turning point in history was precisely captured on May 21, 2021. That evening, the State Council Financial Stability and Development Committee held its 51st meeting. The meeting's communique contained a very short but extremely significant sentence: "Crack down on Bitcoin mining and trading activities." This was no longer a mere "risk warning" or "restriction on development," but rather the highest-level "zeroing order." The following month was the most dramatic 30 days in the history of China's computing power industry. Inner Mongolia took the lead in responding, directly cutting off power to coal-fired mining farms; Xinjiang followed closely behind, conducting a comprehensive investigation. The climax occurred late at night on June 19, 2021. On that day, the Sichuan Provincial Development and Reform Commission and the Energy Bureau issued a notice requiring the cleanup and shutdown of virtual currency "mining" projects. This is the infamous "Sichuan Shutdown Night" within the industry. The real video of that night still circulates online: In a super mining farm in Aba Prefecture, as the clock struck midnight, the on-duty personnel, with tears in their eyes, pulled down the switches of the high-voltage distribution cabinets row by row. The roar of the cooling fans, which had lasted for years like an airplane taking off, disappeared in an instant. The indicator lights of millions of mining machines went out simultaneously. The world suddenly became eerily quiet, with only the still rushing sound of the Dadu River remaining. At that moment, the global Bitcoin network hashrate plummeted by nearly 50%. With a resolute determination, China forcibly removed this industry, consuming hundreds of billions of kilowatt-hours of electricity annually, from the lifeblood of the State Grid. We successfully defended the financial front and freed up precious energy resources. But within the cracks of this grand narrative, an unexpected foreshadowing was planted: we left the electricity behind, but expelled those who "knew best how to use electricity." However, the machines whose power was cut off did not disappear; they began to wander. In the second half of 2021, unprecedented congestion occurred at Yantian Port in Shenzhen. According to freight forwarding companies at the time, tens of thousands of containers were piled up, all filled with S19 mining machines dismantled from Sichuan and Xinjiang. This was a computing power version of the "Dunkirk evacuation." The story returns to its beginning. In 2024, when ChatGPT ignited the global discussion, AI giants suddenly discovered a shortage of power, substations, and high-power data centers capable of rapid deployment. While China had eliminated outdated production capacity, it had also generously shared its capabilities in building and operating ultra-large-scale, high-energy-consuming computing centers with the world. This was a strategic choice concerning national financial sovereignty, a resolute abandonment of this high-risk digital frontier. From a macro-prudential perspective, this was an absolutely correct and necessary strategic action at the time. However, the irony and paradox of history lies in the fact that the enormous bubbles and excess computing power that were actively squeezed out and expelled ultimately solidified on the other side of the ocean, becoming the most unbreakable and stable foundation of the opponent's power grid and energy system. But if one believes that the final outcome of this great migration of computing power is merely "the East loses, the West gains," then one only sees the chips on the table, not the table itself. The AI ​​arms race, in essence, is the endless consumption of energy by computing clusters, ultimately turning into a war over electricity costs. In this war of attrition, no country possesses more strategic depth than China. The US needs miners as a "flexible load" to patch up and extend the life of its power grid, using them as a catalyst to treat its "aging" problems. But China is different, possessing the State Grid as its central brain. Using ultra-high voltage (UHV) transmission, it continuously and with low loss delivers the cheapest clean energy from the west to data center clusters in the east, much like arterial blood transfusions. However, regardless, swept along by the tides of history, Bitmain, the culmination of China's computing power era's power management expertise, has inadvertently become a strategic force reshaping the global energy landscape. They unintentionally offered up the martial arts skills they honed on the banks of the Dadu River to the other side of the ocean, building the first power fence for the coming AI era in the United States. The Fate of "Recruiting" Mining Companies: So, have these "former Bitcoin miners" truly risen to the top in one step, sitting at the table of the AI ​​era? The answer might lie in the calculations of these giants. Have you ever wondered why Microsoft and Google, with their billions in cash flow, would actually entrust their lifeline of electricity to mining companies? Is it simply because building their own infrastructure would take too long? Of course not. The fundamental reason is that they are more wary than anyone else of the lessons of history. Looking back at business history, on the mahogany desks of Silicon Valley tycoons, there's actually an invisible tombstone, engraved with a once-renowned name: Global Crossing. This was the infrastructure giant that suffered the most devastating blow in the dot-com bubble of 2000. At the time, America's elites firmly believed that within a few years, the entire world would enter the internet age, and people would need increasingly faster internet speeds. In this almost religious fervor, founder Gary Winnick borrowed tens of billions of dollars in just a few years, laying hundreds of thousands of kilometers of fiber optic cable in the deep sea like a madman, connecting the Americas, Europe, and Asia. When the dot-com bubble burst, .COM websites simply shut down their servers and laid off employees to complete their bankruptcy liquidation. Infrastructure providers, however, faced a massive asset burden: those fiber optic cables buried on the Pacific seabed, capable of transmitting trillions of bytes per second, overnight became the most terrifying "dead assets" in the eyes of shareholders—unsellable, immovable, lying quietly on the dark seabed, slowly rotting on the balance sheet. In 2002, Global Crossing collapsed, burdened with $12.4 billion in debt. The most ironic ending was that Li Ka-shing's Hutchison Whampoa later tried to acquire these assets for less than 1%, like scrap metal. Global Crossing's own demise proved a cruel truth: in the early stages of technological change, whoever shoulders the irreversible burden of heavy assets becomes the first scapegoat during a cyclical downturn. They thought they held the data lifeline of the future world, but ended up sacrificing themselves for infrastructure. Today, Microsoft CEO Satya Nadella and Google CEO Sundar Pichai surely remember this tombstone better than anyone else. Therefore, when you look at their financial reports from the past two years, you'll find that their core risk control strategy boils down to four words: asset isolation. AI giants are seeing their CapEx capital expenditures skyrocket, but every penny is meticulously calculated: on one end are GPUs and custom servers—relatively "general-purpose" assets that are quick to liquidate and can be sold at a discount if necessary; on the other end are data center buildings, cabling, and cooling systems—typical "specialized heavy assets"—and they're trying to offload these most difficult-to-exit assets. The real strategy is to distribute the burden to others. AI giants are using long-term computing power contracts, electricity contracts, and campus leases to create a chain that appears to be OpEx operating expenses but actually shifts the CapEx risk to others. For the miners who were recruited and the infrastructure players eager to transform, the giants' rhetoric was enticing: "You're responsible for investing in building the factory, you're responsible for handling the liquid cooling upgrade, and I'll be responsible for securing the electricity contracts. As long as AI becomes the era's dividend, you collect rent according to the contract, and I'll get the business growth and stock price returns." It sounds like shared risk, but upon closer inspection, it's more like the popular saying: "Better to die for a friend than for myself." But what if AI ultimately proves to be just another Global Crossing-style illusion? At most, the giants will pay a penalty and write down an asset impairment charge, allowing them to gracefully exit and move on to the next story. But the ones who truly face the banks' loan collection letters and have to explain to creditors how to dispose of those factories specifically designed for high power density, which can do nothing but plug in H100 tubes, are still the infrastructure companies that thought they had finally "sat on the table." Going a step further, some might ask: what if the AI ​​bubble bursts? Can't mining companies simply unplug the GPUs and plug them back into mining rigs to continue mining? More realistically, most mining farms that "switch to AI" don't simply replace their hardware with a new one: AI data centers use GPUs and liquid cooling, while Bitcoin requires ASIC containers with extremely low costs. The two systems are almost incompatible. The capital market has already given you a premium as an "AI infrastructure stock." Announcing a return to mining would simply throw the valuation anchor back from AI to "high-energy-consuming miners." The facilities remain, but the story and market capitalization are liquidated first. So history doesn't repeat itself, but it always rhymes. The fiber optic cables of yesteryear were buried underwater; today, server rooms stand in the wilderness. The people footing the bill have changed, but the roles remain the same. Greatness cannot be planned. Today, in the AI ​​competition between China and the US, computing power and electricity are two key factors in determining victory or defeat. While the US lost out to China in terms of the speed of its ultra-high-voltage power grid construction, it unexpectedly gained a huge "shadow inventory." When Silicon Valley's data center construction was hampered by environmental regulations and supply chain constraints, these mining farms could immediately step in, providing power for GPT-5 and GPT-6 training. The allure of the business world lies in its unpredictability. All strategic planning is essentially looking in the rearview mirror. This was a strategic aid that no one anticipated. It wasn't planned by White House policymakers, nor conceived by the Pentagon, but rather inadvertently built by a group of wandering Chinese engineers and profit-seeking speculators amidst chaotic market competition. The world is always full of 'precise mistakes' and 'vague correctness'. Perhaps this is a parable left by business history: greatness can never be planned.