Regulation
Proposed Arkansas Crypto Mining Regulation Reaches Governor’s Desk • Arkansas Lawyer
This story was updated at 6:13 p.m. with comments from the governor’s office.
Two bills to regulate cryptocurrency mining operations in Arkansas will land on the governor’s desk after passing the House on Wednesday with little debate or opposition.
Senate Bill 78 It would impose noise limits on cryptocurrency mines, prohibit them from being owned by certain foreign entities and allow local governments to pass ordinances regulating the mines. Senate Bill 79 would require cryptocurrency mines to be licensed by the state Oil and Gas Commission under the Department of Energy and Environment.
The bills were among the few pieces of non-budget legislation adopted during the fiscal session, along with a plan to increase the pay of all state employees up to 3%, also headed to Gov. Sarah Huckabee Sanders’ desk.
Subsequently, cryptocurrency regulations became a priority for lawmakers Law 851 of 2023or Arkansas Data Centers Act, was introduced and passed in the final week of the 2023 legislative session. The law limits the ability of local governments to regulate cryptocurrency mines, which are large clusters of computers that harvest digital currency and are often located in rural areas due to the space they occupy.
Six of eight resolutions related to cryptocurrency mining fall short in the Arkansas House
“What we have here … is an emerging industry,” said Rep. Jeremiah Moore, R-Clarendon, the House sponsor of SB79. “We have never seen anything like this in our state before.”
There are cryptocurrency mines in DeWitt, Moore Township, and in the Bono community near Greenbrier. An out-of-state entity attempted to start a cryptocurrency mine near Harrison.
Sen. Bryan King of Green Forest and Rep. Ron McNair of Alpena, both Republicans representing Harrison, voted for SB79 and against SB78. King sponsored six resolutions to introduce their own cryptocurrency mining legislation, but none received the necessary two-thirds approval from lawmakers in each chamber.
Rep. Stephen Meeks, R-Greenbrier, has repeatedly expressed support for cryptocurrency regulation on behalf of the Bono community, where residents have filed a lawsuit alleging noise pollution caused by the local cryptocurrency mine.
Meeks said he and local Faulkner County officials approached the people behind the mine and asked them to reduce its volume.
“They put a soundproof wall on one side, but all that did was send the sound to someone else,” Meeks said. “They weren’t willing to do what was necessary to be good neighbors and, frankly, I think it’s because they just didn’t care.”
Both bills would give “foreign-controlled prohibited activity” exactly one year after implementing policies to divest from ownership of a cryptocurrency mine in Arkansas. Sen. Joshua Bryant, R-Rogers, is a sponsor of both bills and said Tuesday that language was in both bills in case one does not become law.
Each bill passed the House with 93 votes in favor. Reps. Andrew Collins, D-Little Rock, and Justin Gonzales, R-Okolona, were the only members to vote against both bills.
Collins said the language related to foreign ownership had worried him earlier Tuesday voted against the bills on the House City, County and Local Affairs Committee.
Representative Justin Gonzales, R-Okolona (Arkansas Legislature)
The bills would prohibit the federal government’s list of foreign countries from owning cryptocurrency mines International Traffic in Arms Regulations prohibits imports, exports, sales, or a combination of the three. Collins argued that the bills would impose unfair and possibly unconstitutional restrictions on citizens of those countries living in the United States or on Americans living in those countries.
Meanwhile, Gonzales said in an interview Wednesday that he has no problem with the foreign ownership language, but also believes that Law 851 does not need to be changed.
Gonzales said he thought the laws would allow local governments “to discriminate against a business just because of what it is.” Bryant said legislation should prevent that from happening.
Several lawmakers, including Gonzales and Bryant, have said that additional cryptocurrency mining legislation will likely be proposed in the 2025 legislative session.
Sanders will sign both SB78 and SB79, his spokeswoman Alexa Henning said in an email.
“The Governor was the first in the country to oust a Chinese Communist-owned company from his state and strongly supports banning foreign adversaries from owning cryptocurrency mines in Arkansas, while protecting rural communities and giving them the power to crack down on bad actors,” Henning said .
Last year, Sanders ordered a government-owned Chinese agricultural company to relinquish 160 acres of Craighead County farmland and pay the state a $280,000 fine. The cryptocurrency mines are said to be owned by Chinese entities.
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