Arkansas Senate Committee Approves Two Bills to Regulate Cryptocurrency Mining • Arkansas Advocate

An Arkansas Senate committee on Thursday unanimously approved two bills that would regulate cryptocurrency mining operations, and the committee will meet again Tuesday to hear additional public comments on the policies.

Republican Senators Joshua Bryant of Rogers and Missy Irvin of Mountain View introduced the bills after the House on Wednesday resolutions approved Wednesday allowing them to be introduced during the fiscal session. The Senate approved identical resolutions April 11th.

Hence the discussion on whether and how much to regulate cryptocurrency mining at the state level arose Law 851 of 2023or the Arkansas Data Centers Act, which limited local governments’ ability to regulate cryptocurrency mining.

Cryptocurrency mines, large clusters of computers that harvest digital currency, are often found in rural areas because they take up a lot of space. They also require a significant amount of energy to operate and water to keep computers cool.

There are cryptocurrency mines in DeWitt and the Bono community near the Greenbrier, and officials have raised concerns about foreign ownership and whether the mines pose a national security risk. Additionally, residents of the Greenbrier area have filed a lawsuit alleging noise pollution caused by the local cryptocurrency mine, which is located in Irvin Township.

Bryant’s account, Senate Bill 78would impose noise limits on Arkansas cryptocurrency mines, prohibit them from being owned by certain foreign entities and allow local governments to pass ordinances regulating the mines.

Options listed in the bill for noise regulation include “the use of liquid cooling or submerged cooling techniques”, sealing computers in structures that minimize audible outside sound, and siting at least 2,000 feet away from the “nearest residential or commercial structure.”

Residents or business owners within 2,000 feet of a cryptocurrency mine could seek legal remedies regarding noise complaints in the county’s circuit courts, Bryant said.

The bill also clarifies that individuals can engage in cryptocurrency mining from their homes without interference from the government, he said.

“Domestic digital asset mining is limited to the boundaries of what your services can provide you based on the normal retail rate,” Bryant said. “This is a hobby; this is something your personal computer is capable of doing if you want it to… If you want to operate a business out of your home with this and declare it, you need to follow local guidelines and ordinances.

Irvin’s account, Senate Bill 79, would require cryptocurrency mines to be licensed by the state Department of Energy and Environment. It would also require the department to brief legislative committees on its methods of regulating cryptocurrency mining.

Both bills contain emergency clauses, meaning they would take effect immediately if Gov. Sarah Huckabee Sanders signed them into law.

Six other potential cryptocurrency regulatory policies have passed the Senate but failed in the House over the past week.

Senate Bill 78 largely represents one of the failed resolutions, which would have allowed local governments to regulate cryptocurrency mines and ban ownership of mines by the federal government’s list of foreign countries. International Traffic in Arms Regulations prohibits imports and exports.

Irvin said the two bills lay the groundwork for using “different levels of tools” to both regulate the cryptocurrency industry and hold future discussions in the Legislature on whether to introduce additional regulations.

“There’s a lot of things we don’t know and we’re still learning, so I think we need time to dig into all of that,” he said in an interview.

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Public comment

Jerry Lee Bogard and Kenneth Graves, both residents of Arkansas County, where the cryptocurrency mine near DeWitt is located, spoke in favor of both bills.

Graves is on the DeWitt school board and said there is a school about two and a half miles from the cryptocurrency mine. Noise from the mine can travel up to eight and a half miles on a windy day, and he doesn’t want the mine’s noise or electricity use to interfere with children’s education, he said.

Bogard runs the Grand Prairie Farming and Water Company, a water conservation company in Stuttgart, and has expressed concern about the effect of crypto mining on Arkansas’ groundwater supply. The Sparta/Memphis aquifer in eastern Arkansas contains water clean enough to drink and does not recharge easily.

“A cryptocurrency mine can use a few million gallons of water,” Bogard said. “It is not a big deal [by itself], but the important thing is that it comes out of an aquifer that we depend on for human consumption. Twenty cryptocurrency mines might be a little concerning if you live nearby… any number of these small communities that have aging infrastructure and rely on wells from the Sparta aquifer.”

John Bethel, director of public affairs for Entergy, responded to questions from committee members about the impact of cryptocurrency mining on local power grids.

Bethel said the utility is warning customers who are straining the grid, such as crypto miners, that their access to electricity will be cut off if they don’t reduce their usage. Customers who fail to comply with the notification will receive financial penalties that Entergy will later waive if the customer fails to comply just twice in a year, Bethel said.

Committee chairman Sen. Scott Flippo, R-Bull Shoals, said those who fail to heed Entergy’s warnings could face harsher consequences.

Last Thursday, the Senate voted to suspend the rule requiring that a bill not be heard in committee until 24 hours after it is introduced. Sen. Stephanie Flowers, D-Pine Bluff, expressed frustration that the vote could limit public comment, since her district includes part of Arkansas County.

Bryant and Irvin agreed, at Flippo’s suggestion, to send the bills back to committee next week so they can receive more public comments at Tuesday’s meeting.

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