Lawmakers debated two new bills to regulate cryptocurrency mining in Arkansas for the first time on Thursday.
Members of the Senate City, County and Local Affairs Committee posed questions about the two bills to sponsors Sen. Missy Irvin, R-Mountain View, and Sen. Joshua Bryant, R-Rogers, before both were passed.
Both bills would strike parts of 2023’s Act 851, which prevents local governments from enacting sound ordinances specifically for crypto mines, among other restrictions, and add other regulations. They would also declare Arkansas’ crypto mining boom an “emergency.”
One bill, sponsored by Irvin and Rep. Jeremiah Moore, R-Clarendon, would impose noise limits and mandate soundproofing, ban crypto facilities from using water to cool servers and bar citizens of countries listed in the International Traffic in Arms Regulations from owning crypto mining operations in Arkansas.
The other, sponsored Bryant and Rep. Rick McClure, R-Malvern, would require soundproofing as well as requirements for a minimum distance from nearby structures and similarly bar certain foreign nationals from International Traffic in Arms Regulations countries.
It would also add protections for individuals who mine cryptocurrency in their home as a hobby.
The two Senators, Irvin said before the committee on Thursday, worked together to make sure that aspects of their respective bills, including restrictions on foreign ownership, are compatible.
The committee debate
Cryptocurrency is a digital commodity that can be used as payment like money and traded like stocks. Crypto is stored in an online log or ledger called the blockchain, where all crypto transactions are permanently recorded.
Crypto transactions need to be verified and recorded by powerful computers in a process that involves solving complex equations, which also creates new units of cryptocurrency.
John Bethel, director of public affairs at Entregy, spoke on the restrictions that would be set for crypto mines’ electrical use and the effects of crypto mining on the electrical grid under the proposed legislation.
Ken Graves, chairman of the Arkansas Rice Growers’ Association, and Jerry Lee Bogard, an irrigation consultant, both expressed concerns that crypto mining was consuming too much water and harming the aquifer.
Senators addressed issues, including doubts about crypto mining facilities being located too close to military installations, the efficacy of penalties meant to deter crypto miners from breaking rules around energy use, the perceived dangers of foreign ownership and the ways in which crypto operations might affect utility services for nearby farmers.
Several senators made it clear they’re sympathetic to the bills, or at least skeptical of crypto mining to some extent.
“Can you tell me what a crypto mine produces in regard to what’s essential to human life?” asked Sen. Gary Stubblefield, R-Branch, at one point.
“Nothing,” replied Bogard.
“There are people invested in crypto in Arkansas,” said Sen. Dan Sullivan, R-Jonesboro. “I take a little exception to the answer that it has no value. We don’t know what the value is yet. It may be upside, it may be downside, it’s likely a combination of both. But I hate to demonize them too much before we know the answer to that.”
“Was there a large number of Arkansans invested in Enron?” Stubblefield asked in response.
How did we get here?
Because the General Assembly is in a fiscal session, usually reserved for budget legislation, there were several additional steps to get a legislation fix before lawmakers. The House and Senate both had to pass resolutions, one for each potential bill, by a two-thirds vote before legislators could introduce the bills.
The bills in committee Thursday are based on the only resolutions, out of eight, that passed in both the House and the Senate.
Seven out of eight passed in the Senate last week but only the two made it through a House vote Wednesday.
Arkansas, with its cheap, plentiful land and electricity, is a prime location for crypto mining and many operations have sprung up in the last few years.
Crypto mining computers consume large amounts of electricity. They also produce heat and need to be cooled either by powerful cooling fans, which can be very loud, or by circulating water drawn from wells.
Act 851, a law passed by the General Assembly last year, prevents local governments from regulating many aspects of crypto facilities’ operations, including noise and zoning.
The law passed quickly and easily in 2023 but has since seen a strong backlash as its provisions, which many lawmakers say were poorly understood at the time, have become more widely known.
The other six measures
All of the resolutions that failed Wednesday’s vote in the House were sponsored by Rep. Joshua Miller, R-Heber Springs.
They mirrored the six resolutions introduced to the Senate by Sen. Bryan King, R-Green Forrest, one of the leading voices in the General Assembly criticizing Act 851 and advocating for tighter controls on the new and booming industry. Five of those six passed in the Senate last week.
“I really was surprised that there’s such an adamant opposition” in the House, Miller said Wednesday. He said he thinks that may be because those six are seen as further reaching than the two that did pass.
“It may not be everything that I wanted,” he said of the two bills in committee, “but at least it will be a step in the right direction.”
“I will support anything that moves the needle.”
“I hope that a good, trustworthy solution to all these problems will be found in the confines of the other two resolutions,” Miller said.
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