Arkansas Senate committee approves two bills to regulate cryptocurrency mining

An Arkansas Senate committee unanimously approved two bills Thursday that would regulate cryptocurrency mining operations, and the committee will reconvene Tuesday to hear more public comment on the policies.

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

The discussion of whether and how much to regulate crypto mines on the state level arose from Act 851 of 2023, or the Arkansas Data Centers Act, which limited local governments’ ability to regulate crypto mines.

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

There are crypto mines in DeWitt and in the Bono community near Greenbrier, and officials have raised concerns over foreign ownership and whether the mines pose a national security risk. Additionally, Greenbrier-area residents have filed a lawsuit claiming noise pollution from the local crypto mine, which is in Irvin’s district.

Six of eight crypto mining resolutions fall short in Arkansas House

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

The bill’s listed options for noise regulations include “using liquid cooling or submerged cooling” techniques, sealing computers into structures that minimize the sound heard outside, and being located at least 2,000 feet away from “the nearest residential or commercial structure.”

Residents or business owners within 2,000 feet of a crypto mine would be able to seek legal remedies regarding noise complaints in county circuit courts, Bryant said.

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

“Digital asset mining in the home is limited to the confines of what your utilities can provide you based on your normal retail rate,” Bryant said. “This is a hobby; this is something your personal computer is able to do if you so choose…If you want to operate a business out of your home with this and declare that, then you must follow local guidelines and local ordinances.”

Irvin’s bill, Senate Bill 79, would require crypto mines to be licensed by the state Department of Energy and Environment. It would also require the department to inform legislative committees of its crypto mine regulation methods.

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

Six more potential crypto regulation policies passed the Senate but failed in the House within the past week.

Senate Bill 78 largely accounts for one of the failed resolutions, which would have allowed local governments to regulate crypto mines and prohibit ownership of the mines by the list of foreign countries from which the federal International Traffic in Arms Regulations bans imports and exports.

Irvin said the two bills lay the groundwork to use “several layers of tools” to both regulate the crypto industry and have future discussions in the Legislature about whether to put additional regulations in place.

“There’s a lot we don’t know and that we still are learning, so I think we need the time to flesh all that out,” she said in an interview.

Public comment

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

Graves is on the DeWitt School Board, and he said there is a school about two and a half miles from the crypto mine. Noise from the mine can travel up to eight and a half miles on a windy day, and he does not want the noise or the mine’s electricity usage to interfere with children’s education, he said.

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

“One crypto mine may use a few million gallons of water,” Bogard said. “That’s not a big deal [by itself], but what is a big deal is that it’s coming out of an aquifer that we depend upon for human consumption. Twenty crypto mines may be a bit of a concern if you live nearby…any number of these small communities that have aging infrastructure and depend upon the Sparta Aquifer wells.”

John Bethel, director of public affairs at Entergy, answered questions from committee members about crypto mines’ impact on local electric grids.

Bethel said the utility company notifies customers who are straining the grid, such as crypto miners, that their access to electricity will be shut off if they do not reduce their usage. Customers who do not comply with the notification will receive financial penalties that Entergy will later retract if the customer only fails to comply twice in a year, Bethel said.

Committee chair Sen. Scott Flippo, R-Bull Shoals, said those who do not heed Entergy’s warnings might need to face stricter consequences.

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

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