Admiral Samuel Paparo, Jr., who leads U.S. forces across the Indo-Pacific, told a Senate panel that Bitcoin matters to national security. “Bitcoin is a reality,” he said. “It is a valuable computer science tool as a power projection. And outside of the economic formulation of it, it has got really important computer science applications for cybersecurity.” The next day, at a House hearing, Paparo confirmed that the Pentagon is running its own Bitcoin node and carrying out “a number of operational tests to secure and protect networks using the Bitcoin protocol.” It was the first time the military had publicly said so. The admission did not come in a vacuum. Iran is now taking Bitcoin as payment for ships passing through the Strait of Hormuz. Taiwan is weighing it as a reserve asset in case China moves against its finances. Russia said last week it will accept Bitcoin for international trade starting in July. What was once a fringe digital currency is increasingly being treated as a tool of statecraft. China stockpiles Bitcoin while banning it at home China’s position is the most complicated. Beijing banned Bitcoin and all crypto activity in 2021, citing environmental damage, fraud risks, and illegal money flows. Yet China already holds the second-largest government Bitcoin stockpile in the world. In May 2025, the International Monetary Institute, China’s top financial think tank, translated and shared a report by former White House economist Matthew Ferranti arguing that Bitcoin could help central banks guard against inflation, sanctions, and financial crises. The institute passed it to Communist Party policymakers with a note saying Bitcoin’s rise as a reserve asset “deserves continued attention.” The clearest sign of China’s real intentions is a legal fight with Washington. According to Cryptopolitan’s report , the U.S. Department of Justice seized 127,000 Bitcoin, worth roughly $15 billion, from Chen Zhi, a Chinese billionaire accused of running fraud operations across Southeast Asia that drained hundreds of American victims. Before U.S. authorities could detain him, Chinese officials pulled Chen back to China in January, filing their own charges against the 38-year-old. China has no extradition deal with the United States. Beijing then accused Washington of stealing the Bitcoin through a hack as far back as 2020, claiming U.S. agents broke into Chen’s mining operation, LuBian, and later dressed it up as a law enforcement seizure. The stakes are straightforward: if China recovers Chen’s holdings, it would control roughly 321,000 Bitcoin, well ahead of the United States at 198,000. America’s mining strength runs on Chinese hardware Two Republicans are pushing to cut China’s advantage on the mining end. In March, a bill, Mined in America, was introduced by Senators Bill Cassidy of Louisiana and Cynthia Lummis of Wyoming. It addresses the 97% of China’s hardware used in 38% of the US global Bitcoin mining activity. About 82% of the global production that specialized chip miners depend on is controlled by Bitmain. Dennis Porter of the Satoshi Action Fund called this “a liability”. The bill bans certified miners from buying any new China-made hardware from next year. By 2030, the miners are required to fully transition from the existing hardware. The bill would create a voluntary certification program through the Department of Commerce. Certified miners can no longer buy new Chinese hardware after January 1, 2027, and would need to completely stop the use of any such hardware by 2030. It also locks in President Trump’s March 2025 executive order creating a Strategic Bitcoin Reserve and lets certified miners sell freshly mined Bitcoin to the Treasury at a tax advantage. “Digital asset mining is a big part of our economy. We should be doing it here in America,” said Senator Cassidy. In China, the crypto rules have become stricter. Now it’s illegal to even promote crypto online on any platform. The rule will take effect on September 30th. Congressman William Timmons put the broader contest simply: “If you can’t control your citizenry as it relates to information and money, what do you have left?” The country banning Bitcoin for its people is racing to stockpile it for itself. The smartest crypto minds already read our newsletter. Want in? Join them .
