Several laws were passed in the Arkansas legislature earlier this year around cryptocurrency mining, and now a state senator is recommending a special session to repeal these laws. Ozarks at Large senior news producer Jacqueline Froelich sat in with Matthew Moore to discuss why these repeals are being considered.
Matthew Moore: You’ve been reporting on cryptocurrency mining in Arkansas. Several laws were passed in April by the Arkansas legislature to protect and attract more cryptocurrency mining to the state to generate revenue. But these mines are causing a stir in communities, leading to efforts by one lawmaker to repeal the measures?
Jacqueline Froelich: Yes, a big stir. Cryptocurrency mines are large banks of computer servers often housed in vacant warehouses and factories. The end goal is to generate valuable virtual currency such as Bitcoin. According to the newly formed Arkansas Blockchain Councilaround a dozen crytpo mines have opened around the state over the past two years, with more coming. This summer Republican state Sen. Bryan King of Green Forest is pressing colleagues to repeal the new laws that aim to attract the industry to Arkansas.
MM: King notified you about a Senate Committee meeting about bitcoin mining he held early last week at North Arkansas Community College in Harrison, where construction of a proposed crypto mine was recently blocked. What was on the agenda?
JF: The top item is Act 851 which supposedly regulates crypto mining in Arkansas. The measure sailed thru the state legislature with just a single vote in opposition, King says, at the tail end of the session. The new law, which took effect yesterday, refers to mines simply as “data centers.” Second, the law bars discrimination against any data center by local governments. That means quorum courts and city councils cannot enact controlling ordinances. I spoke with Sen. King late last week, who initially voted in support of Act 851. He regrets and vote after studying the industry and has major concerns.
Senator Bryan King: “Concerns about the noise levels of some facilities. You know another concern is the energy concerns. Even the crypto people said that they use anywhere from 5 to 15 megawatts a day of energy 10,000 megawatts from my understanding can power 7,000 homes. Given the unknown about this industry, the reality the way the bill was passed, you know we we need to look at that. And you know I think a lot of members are going like what did we vote on what are we doing?”
JF: Because King, again, says Act 851 was passed in haste with no informed consideration by lawmakers due to packed agenda towards the end of the session, he’s calling for a special session to repeal it.
MM: You’ve reported that Crypto miners, including Chinese investors—where this industry is banned—are coming to Arkansas to take advantage of abundant and relatively cheap electricity and lax zoning laws?
JF: Yes. For example one of the first cryptocurrency mines on the Ozarks, located in rural Faulkner County in the unincorporated community of Bono powered up last April. The servers are housed in over a dozen trans oceanic shipping containers, referred to as "ant farms.” Here’s what the facility sounds like from 120 feet away.
County resident Dell Wilder recorded that audio when the facility first fired up. It sounds like a jet engine, on the ground -- at full throttle -- day and night. And apparently the metal buildings have yet to be soundproofed. So I checked back with her, a follow up call.
Dell Wilder: “Well in actuality it's been like hell. The community has not reacted well to it the noise is still as loud as ever and I can only say this facility is predatory and the reason that they have not done anything substantial as far as barriers to even hamper noise that is affecting the whole community.”
JF: Wilder provided me documents showing that more than a dozen Faulkner county residents on July 24th filed a lawsuit in U.S. District Court, Eastern District of Arkansas against Newrays One LLC, the company that built the mine. So we’ll monitor that.
One other thing is that Sen. King says is that lawmakers also rushed to pass a second crypto industry bill, Act 819, which provides sales and use tax exemptions to attract the industry to Arkansas. That law claims the mines create jobs, pay taxes, and provide general economic value to local communities and this state. But King points out that only a few techs are required to run the crypto mines once built, and due to the amount of electricity the facilities consume, that could lead to power black-outs. So King is looking to repeal that law as well.
MM: Regulators at the federal level are also starting to scrutinize cryptocurrency mining power consumption?
JF: Yes. Last May the White House proposed requiring crypto miners to pay a premium, a 30 percent tax on energy consumption. Here in Arkansas, Act 851 does require crypto miners “to pay applicable taxes and government fees in acceptable forms of currency and operate in a manner that causes no stress on an electric public utility’s generation capabilities or transmission network.”
MM: If Governor Sanders calls a special session to revisit the laws, a two-thirds majority is needed in both houses to repeal?
JF: That’s right. A large ask for an industry few people know about let alone understand.
This transcript has been edited and condensed for clarity’s sake.
