Photo: Alex Wong/Getty Images
In recent months, the Committee on Foreign Investment in the United States (CFIUS) has garnered widespread attention amid two ongoing cases, the first regarding Nippon Steel’s acquisition of U.S. Steel and the other regarding ByteDance’s ownership of TikTok. However, the committee’s first investigation to merit an official action by President Biden has nothing to do with steel products nor dance videos. In May 2024, the administration took action—on the recommendation of CFIUS—against a property transaction in Cheyenne, Wyoming, involving MineOne, a cryptocurrency mining firm purportedly owned by Chinese nationals.
As CFIUS investigates an additional real estate transaction in California, the MineOne order may be the tip of the proverbial iceberg. Calls for increased scrutiny of real estate and farmland transactions have only grown in recent years, especially amid the committee’s recent reluctance to review such cases. Election year politics and the Biden administration’s subsequent embrace of “tough on China” trade policies lend further credence to a more active CFIUS.
Q1: Why did MineOne’s real estate purchase trigger CFIUS intervention?
A1: In June 2022, MineOne Partners Limited, a British Virgin Islands-based cryptocurrency mining firm owned by Chinese businessmen, partnered with U.S.-based subsidiaries to acquire property within one mile of a U.S. Air Force base in Cheyenne, Wyoming. The base is home to, among other things, 150 Minuteman III intercontinental ballistic missiles and over 3,000 service members and their families. Following MineOne’s purchase, the firm built a cryptocurrency mining operation onsite, which demands significant computing power and hardware. CFIUS learned of the transaction and operation from a public tip (reportedly from Microsoft, which operates a nearby data center) rather than via notification by either MineOne or the property’s seller. After an initial investigation, the committee requested that the parties to the transaction file an official notice, which triggered a more comprehensive review.
Q2: What is the CFIUS mandate for real estate transactions, and has the U.S. government previously ordered similar forced divestments of property?
A2: CFIUS investigated MineOne’s property acquisition pursuant to authorities granted by the Foreign Investment Risk Review Modernization Act of 2018. The bill expanded CFIUS’s jurisdiction to cover real estate transactions that involve acquisitions by foreign persons of land property in “close proximity to,” meaning within one mile of, specific U.S. military installations, in addition to rights to access and build on the property. There are over 150 such installations, with an additional 40 that enjoy “extended range” protections, meaning all transactions within 99 miles (and 12 nautical miles) of them are covered. CFIUS can make changes to either list as it deems necessary through further rulemaking.
Presidential prohibitions of foreign acquisitions are rare, with only eight in total since President Ford established the committee in 1975. Overcompliance by the private sector is a primary reason, as companies often abandon a transaction if CFIUS indicates there are problems with it. For example, in 2016, Blackstone ended the sale of the Hotel del Coronado, located near a San Diego naval base, to China’s Anbang Insurance Group Co. after CFIUS privately raised its concerns. Mitigation efforts are another cause, with many transactions altered to minimize their potential national security concerns, such as COSCO Shipping Holdings Company’s 2018 acquisition of Orient Overseas International Ltd., which required COSCO’s divestment of its holdings in the Long Beach Container Terminal.
Seven of CFIUS’s eight presidential orders requiring divestment have involved a Chinese acquiror and only two have explicitly focused on real estate–related concerns. In addition to the MineOne order, CFIUS ordered in 2012 that the Ralls Corporation, a Delaware-based holding company owned by two Chinese nationals, divest all its interests in four Oregon wind farm projects, presumably due to their proximity to restricted air space at the Naval Weapons Systems Training Facility Boardman. Another investigation is ongoing in California, where a bipartisan coalition in Congress has rung alarm bells about a Delaware LLC whose yet-to-be-disclosed owners have purchased hundreds of millions of dollars’ worth of land near a U.S. Air Force base.
Q3: Why did President Biden approve the MineOne divestment order? Are there valid national security arguments, or does the decision reflect election year politicking?
A3: The committee determined that the land purchase in Wyoming allowed the presence of “foreign-sourced,” “specialized” equipment “potentially capable of facilitating surveillance and espionage activities” to be stationed too close to an important hub of military infrastructure. The national security risk was apparent, and the Biden administration announced on May 13 that MineOne must divest its interest in the land within 120 days and remove all “equipment” and “improvements” from the property within 90 days.
President Biden’s intervention is particularly interesting considering MineOne’s May 8 announcement to sell the property at issue to CleanSpark, a publicly traded and U.S.-owned cryptocurrency mining firm that portrays itself as “America’s Bitcoin Miner.” The order makes no mention of the proposed deal, suggesting its terms did not fully address and mitigate the risks posed by MineOne’s original purchase. With the CFIUS order, the government may now inspect the property, removals, and any data in MineOne’s possession, in addition to reviewing the planned divestment of the property to CleanSpark.
This order can be seen as part of the Biden administration’s adoption of stronger, China-focused policies, most clearly seen in his May 14 announcement of new tariffs on $18 billion of Chinese goods, which cover steel and aluminum, semiconductors, and electric vehicles, among other products. While there are genuine security issues involved, the Biden administration has also sought to demonstrate its foreign policy chops, and President Biden has sought to outflank Donald Trump as the “toughest” candidate on China.
Q4: How has Congress pressured—or provided cover for—the Biden administration to embrace greater CFIUS authorities?
A4: As members of Congress across the political spectrum embrace more hawkish views toward China, real estate transactions involving foreign nationals have emerged as a high-profile flashpoint. One such case is the “Fufeng Controversy” in Grand Forks, South Dakota, wherein CFIUS refused to investigate a Chinese firm’s acquisition of real estate twelve miles from a U.S. military drone facility due to limited jurisdiction. As a similar inquiry unfolds in California, Congress is littered with proposals to expand CFIUS’s jurisdiction over land transactions, with many touching on agricultural lands. In the meantime, politicians on the federal, state, and local level have called on the administration to act, or, in Grand Fork’s case, acted in the federal government’s absence.
The Department of Defense (DOD) has sought to keep pace amid the fervor. In May 2023, the DOD issued a proposed rule to expand the list of sensitive military installations subject to review under CFIUS authority to include Grand Forks. CFIUS has likewise expanded its staff and activity, with 2022 marking a record high in cases cleared with mitigation and the second-highest number of investigations ever conducted.
Among Congress’s many proposals to expand CFIUS’s authorities, three stand out given their competing approaches to refining review criteria and processes. Notably, despite congressional uproar, none have progressed beyond their respective committees of jurisdiction thus far.
Q5: What are the implications for future real estate transactions?
A5: Despite the outcome of CFIUS’s MineOne investigation, the case demonstrates limitations to CFIUS’s existing authorities. If the MineOne property had been another mile farther from the nearby U.S. Air Force base, it would not have been in “close proximity,” meaning the acquisition would not have been a covered real estate transaction. Yet again, there would be a Fufeng-like controversy. The DOD can continue to address such cases on an ad hoc basis via further rulemaking, but Congress’s appetite for expanded CFIUS authorities over real estate transactions appears here to stay. Now-retired Congressman Mike Gallagher led the charge on this issue in the House of Representatives via his perch at the Select Committee on Strategic Competition between the United States and the Chinese Communist Party, and others will surely take up that mantle in his place. The administration has not yet commented on the various proposals emanating from the Hill, though it is presumably not opposed to them after having sought to provide the committee with a “sharper scalpel” in recent years. Plus, with presidents Biden and Trump seeking to showcase to voters their anti-China records, more work on economic security measures, including a potential expansion of CFIUS’s authority over real estate transactions, should be expected.
David Korn is an intern with the Scholl Chair in International Business at the Center for Strategic and International Studies (CSIS) in Washington, D.C. William Reinsch holds the Scholl Chair in International Business at CSIS.
