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A closer look at cryptocurrency mining in Arkansas

Act 851 in the 2023 Regular Session created the Arkansas Data Centers Act of 2023 and clarified the regulation of digital asset mining.
Act 851 in the 2023 Regular Session created the Arkansas Data Centers Act of 2023 and clarified the regulation of digital asset mining.

Senator Joshua Bryant of Rogers was the lead sponsor on House Bill 1799, and he said that the burgeoning industry of cryptocurrency is no different than other kind of business.

“You do have to scrutinize it, you do have to watch it," Bryant said. "But at the end of the day, it may be a piece of our society that actually advances us.”

Senator Bryant said his priority during this legislative session was being an advocate for property rights. And for him, this bill was a part of that as well.
“I wasn’t approached by anybody other than local citizens — in fact, veterans, of which I am — saying ‘Hey, I want to invest. I want to bring millions of dollars into our state of Arkansas. But I want some protections that, as long as I follow and play by the rules that you won’t just arbitrarily kick me out of the state,'” he said.

To put it mildly, a lot of attention was paid to a few major pieces of legislation that was passed this year. House Bill 1799 was not one of those.

On Thursday, March 30, the bill was filed and assigned to Advanced Communications and Information Technology Committee in the House of Representatives. On Monday, April 3, it passed out of committee unanimously. On Tuesday, April 4, the house voted 88-2 to send it to the Senate. Wednesday, April 5, the Senate City, County & Local Affairs committee heard the amended version of the bill and passed it out of committee unanimously. Thursday, April 6, the Senate passed it unanimously. And by Friday, April 7, the amended version of the bill was concurred by the House 93-1.

Sen. Bryant said he has been surprised by the pushback on Act 851, considering it passed so easily.

"I ran some pretty controversial legislation — just for the discussion, if for nothing else — and I was a little surprised that this took a lot of energy out to those other [bills instead]. It shouldn't be controversial in the view of property rights. The reason the legislation is good is because whether this legislation was intact or not, crypto mining was already in Arkansas and crypto companies were already looking at Arkansas," he said.

There seems to be three major concerns with the bitcoin mining facilities that are cropping up around Arkansas. The first is a strain on utilities, such as water.

Terry Don Robinson is the mayor of Wooster, Arkansas. A crypto mine is located in Greenbrier, but it gets its water from neighboring Wooster. Robinson said whoever installed the water coolant system likely did so incorrectly, and a major water leak has been an issue for months. He said the facility utilizes two different 2,000 gallon tanks that are designed to recirculate and use the same amount of water constantly for 60 days. After that 60 days, they dump the water — which is not contaminated in anyway — and refill those tanks. But because of the leak, the usage was extremely high. One month's reading was 479,000 gallons of water, another was as high as 601,000 gallons of water. Robinson points out the months with the major water leak are not indicative of their regular usage.

Electricity on the other hand, is a greater concern. A study by the White House Office of Science and Technology Policy from September of 2022 estimates that the total global electricity usage for cryptocurrency mining assets is between 120 billon and 240 billion kilowatt-hours per year. That’s more than countries like Australia and Argentina.

But, the bill lays out language that says that these facilities will “operate in a manner that causes no stress on an electric public utility’s generation capabilities or transmission network.” Senator Bryant said this means that crypto mines had to negotiate with Arkansas Public Service Commission.

“We don’t want you to consume and take the consumption away from other consumers or our hospitals or retail companies, and crypto got that," Sen. Bryant said. In exchange for agreeing to allowing their electricity to be shut off to prioritize other critical services, Entergy Arkansas has offered crypto mining facilities a discounted rate for electricity.

The second major concern is the noise the crypto mines produce. As we reported back in August, these facilities can be very loud. Robinson, the mayor of Wooster, said one sound barrier wall has been installed.

 “I think they’ll have to install another one to the south," he said. "They put one on the north and it has a curved top, so instead of shooting the sound to the north, it now shoots it south. It is pretty loud, it would be annoying if you lived there seven days a week. And it's probably dropped their property value to dead zero, that’s the main thing.”

Senator Bryant said being able to have peace and quiet on your property is a right people should be able to enjoy, and that Act 851 establishes that all these facilities will follow local regulations.

It’s true that many local municipalities have noise ordinances or decibel level ordinances in place. However, that is not always the case in rural communities or at a county level. And Act 851 lays out that a local government shall not impose a different requirement for a digital asset mining business than is applicable to any requirement for a data center. That means if a crypto mine is set up in a rural area, and there is no noise ordinance in place beforehand, the local government is not allowed to enact a new ordinance.

The final concern is around the ownership of the mines. Reporting from several other news outlets have noted connections between crypto mining in Arkansas and China. At Ozarks at Large, we do not have enough independent reporting to feel confident in making those same assertions. However, after Governor Sarah Huckabee Sanders and Attorney General Tim Griffin recently held a press conference announcing the removal of a seed company that owned 160 acres of land in Craighead County due to its parent company being a Chinese-government owned entity, concerns are growing around the various LLCs involved in cryptomining. The law that was used in the case of Syngenta, Act 636, bans 9 different countries from owning agricultural land, so it’s not entirely clear that it would be applicable to this situation. Senator Bryant says he has reached out to the Attorney General about this concern nonetheless.

“They are reviewing it, researching it, and going to address it if it violates the law," Sen. Bryant said.

Senator Bryant recalled a proposed piece of legislation from a previous session where a lawmaker prohibiting the sale of any land to a foreign national. "That didn't advance, because you have landowners in Arkansas who want to be able to sell their land for their best and highest profit." He said someone describe to him as trying to pick a stick out of a bundle of sticks. "Be careful which one you pick, because the bundle might unravel."

Ozarks at Large reached out to Governor Sanders’s office to talk to Jamie Barker, the governor’s legislative director. He was not made available for an interview or to provide comment. Communications director Alexa Henning also declined a request to do an interview on the record but provided a statement saying that the safety and security of Arkansans is Governor Sanders’s top priority.

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Matthew Moore is senior producer for Ozarks at Large.
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