Warren claims foreign-owned US crypto mines could be used to 'bring down the power grid'

Senator Elizabeth Warren, D-Mass. suggested foreign-owned crypto mines in the U.S. could pose a threat to the country.

Speaking at a hearing of the Senate Committee on Banking, Housing and Urban Affairs on Thursday, Warren questioned Paul Rosen, Assistant Secretary for Investment Security, Department of the Treasury, on the dangers posed by foreign-owned cryptocurrency mining facilities operating in the U.S.

Warren, a vocal critic of the crypto industry, said crypto mining is a “disaster for the environment,” despite its potential benefits for incentivizing renewables, grid stabilization, stranded energy utilization and job creation. The senator called for strong anti-money laundering protections to prevent such operations from undermining U.S. national security.

“Crypto mines could be used by our adversaries to spy on military bases, or to bring down the power grid, or move money in and out of the country in secret,” Warren said.

Warren claimed foreign companies were increasingly building crypto mining facilities in the U.S. that have been banned in other countries and are “loud, hot and suck up a ton of electricity.” Citing an unnamed blockchain analytics firm, the senator asserted that a third of these operations in the U.S. are owned by citizens of the People's Republic of China, including those with direct ties to the Chinese government.

Warren highlighted a case in May, when President Joe Biden issued an order blocking a China-majority-owned crypto mining company from having property close to an Air Force base in Wyoming, citing national security risks concerns.

Questioned on whether that mine could have been used to spy on U.S. military operations and nuclear weapons systems, Rosen said he was limited in what he could say about that particular case but that there is a “generalized concern that sophisticated equipment in proximity to sensitive facilities can be used for espionage.”

Warren also claimed that foreign-owned crypto mining facilities’ connection to the U.S. energy grid could leave the country vulnerable to targeted blackouts and cyber attacks. Rosen seemingly agreed, adding, “of course, an impact on our energy sector, our energy resources, our energy supply chain could very much have a national security impact.”

Additionally, Warren alleged foreign nationals had been able to buy up mining operations in the U.S. "in secret," bypassing the traditional banking system by purchasing them in cryptocurrency, suggesting the U.S. needed to “plug the holes in the anti-money laundering rules” that allow such transactions.

“It is also how U.S.-based crypto mines have been able to secretly send millions of dollars back to China,” Warren claimed.

“I certainly share your concern over ultimate beneficial ownership and making sure we know who is doing the buying,” Rosen responded. “When we look at a transaction, or try to find a transaction, that’s a critical component to our diligence.”

“Last year the Treasury Department requested additional tools from Congress to prevent China, Iran, Russia and other foreign countries from using crypto to evade sanctions and launder dirty money. It is time for us to pass laws, laws that the Treasury needs,” Warren concluded.

Warren’s 'anti-crypto army'

Warren, seeking her fourth term as a U.S. Senator, is known for her often critical stance on crypto and desire to build up an "anti-crypto army" as part of her re-election campaign, calling for a wide-ranging crackdown on illicit activity in the market and expansion of federal regulator authority to hold the industry to the same standards as traditional finance.

In February, pro-crypto lawyer John Deaton officially made his bid for the U.S. Senate in Massachusetts to face off against Democrat Sen. Elizabeth Warren in the fall.

Earlier this week, Warren was dealt a blow regarding her controversial Digital Asset Anti-Money Laundering Act, with U.S. Senator Roger Marshall, R-Kan. withdrawing from the proposed crypto anti-money laundering bill he originally introduced alongside Warren. The bill aims to expand know-your-customer and anti-money laundering verification responsibilities to digital asset service providers, miners, validators and other participants in efforts to close existing security loopholes in crypto.