Arkansas state Reps. R. Scott Richardson (left), R-Bentonville, and Trey Steimel, R-Pocahontas, listen to state Sen. Joshua Bryant present a proposal during the House and Senate Committee on City, County, and Local Affairs joint meeting at the state Capitol on Wednesday, March 27, 2024. The proposal, which was later approved, authorizes a study on "the development of a strategy to regulate digital asset mining (also known as 'crypto mining') businesses within the State of Arkansas." (Arkansas Democrat-Gazette/Staci Vandagriff)
State lawmakers are still grappling with how to regulate a new industry that has pitted rural Arkansas against noisy tech entrepreneurs.
With lots of questions, some regrets and few answers, members of a House and Senate committee that met jointly on Wednesday voted to authorize a study on "the development of a strategy to regulate digital asset mining (also known as 'crypto mining') businesses within the State of Arkansas."
While the General Assembly approved the Arkansas Data Centers Act of 2023, or Act 851, which limits local governments' ability to pass regulations specifically aimed at crypto mining, some lawmakers have expressed regret as noisy crypto mines have bothered residents in rural communities.
State Sen. Joshua Bryant, R-Rogers, the Senate sponsor of Act 851, said the law was meant to prevent local government from "capriciously" shutting down crypto mines that he said were acting in good faith.
"Well then, after session, what we learned was there are also bad actors in this industry, and those bad actors were now protected, maybe to an extent, by [Act 851]," Bryant said Wednesday.
Bryant asked lawmakers on the House and Senate City, County and Local Affairs committees to study how to regulate crypto mining with the idea to have a bill ready for the 2025 regular legislative session. Bryant said the study will focus on ways the state can police the noise from crypto mines and foreign ownership of mines.
Bryant expressed concern about foreign ownership of some crypto mines in the state, saying legislators passed a law in 2023 prohibiting certain "prohibited foreign party-controlled" businesses from owning agricultural land in Arkansas.
Attorney General Tim Griffin is investigating whether Jones Digital LLC, which has plans for a crypto mine in DeWitt, has connections to the Chinese government that would violate the law.
Crypto mining requires an energy-intensive process as computers running 24-hours a day mine for cryptocurrencies by solving complex equations. The computers need to be cooled by fans, which often create a loud buzzing noise that bothers nearby residents.
Bryant, who co-sponsored the Arkansas Data Centers Act with Rep. Rick McClure, R-Malvern, said his intention was to support American-owned crypto mines.
The bill passed 93-1 in the House and 33-0 in the Senate. Neither the Arkansas Association of Counties or the Arkansas Municipal League, groups that typically lobby against bills that interfere with local control, opposed the law, Bryant said.
"Well it was late in the session and we did not have a good opportunity to evaluate that bill and how it would impact our counties," Chris Villines, executive director of the Arkansas Association of Counties, said in an interview Wednesday.
During a joint meeting with the House and Senate Public Health, Welfare and Labor committees last month, Faulkner County officials complained to lawmakers about the high-pitched noise and water usage from a local crypto mine. Local officials have said they feel powerless when it comes to regulating crypto mines, as Act 851 prohibits them from passing ordinances specifically targeted at crypto mining.
A group of 23 Faulkner County residents sued NewRays One LLC, the company behind a crypto mine near Greenbrier, saying noise from the facility has hurt their quality of life. A trial date for the case, which was moved from Faulkner County Circuit Court to federal court, hasn't been set.
A separate federal lawsuit, filed by Jones Digital over a noise ordinance passed by Arkansas County, lists New Rays Inc. as one of several "members of Jones Digital." That case is set for trial in March 2025.