Regulation
Sanders signs bills requiring cryptocurrency mining permits and restoring local authority to issue regulations
Gov. Sarah Huckabee Sanders signed two bills Friday aimed at regulating cryptocurrency mining in Arkansas while returning local authority to cities and counties that want to oversee the booming industry.
The enacted bills, Senate Bill 78 and Senate Bill 79, are the state legislature’s attempt to address concerns about noise, regulation and foreign ownership of crypto mines -cash. The legislation amends the Arkansas Data Center Act of 2023, which prohibits localities from adopting ordinances to regulate crypto mining.
However, in the months since the law’s passage, many lawmakers have expressed regret over the Arkansas data center law after hearing residents express concerns about noise from cooling fans used by nearby crypto mines and local officials who felt powerless to regulate such operations. .
SB 78, sponsored by Sen. Josh Bryant, R-Rogers, returns authority to cities and counties to adopt crypto mining regulations. Bryant was also the sponsor, along with Rep. Rick McClure, R-Malvern, of the Arkansas Data Center Act, also known as House Bill 851 of 2023.
The law also prohibits local governments from passing ordinances that prevent a resident from mining cryptocurrencies at home or that require residents to first obtain approval.
SB 78 requires crypto mines to use “noise abatement techniques” such as liquid or submerged cooling, or that operations involve completely enclosing the shroud, which requires covering noise-generating equipment from all the sides.
There is an exception for crypto mines located at least 2,000 feet from the nearest residential or commercial building, or if the mine is in an area zoned for commercial use. Crypto mines that fall under an exemption can instead use a “passively cooled prefabricated container without additionally enclosing the system in a complete casing.”
SB 79, sponsored by Sen. Missy Irvin, R-Mountain View, would require crypto mining to be licensed by the Oil and Gas Commission.
Both bills also prohibit ownership by “prohibited foreign parties” such as China or other countries subject to international arms trafficking regulations. Both bills prohibit prohibited parties from having any “property interest greater than zero percent.”
Both laws were passed with an emergency clause, meaning they take effect immediately, but they give existing crypto mines 90 days to comply.
Sanders indicated at a news conference Thursday that she would sign the bills, saying, “We also continued to end the influence of the Chinese Communist Party in our state, restoring local control over facilities crypto mining and cracking down on bad actors. »
Some cryptocurrency mines have drawn complaints from residents about the loud hum of fans used to cool banks of computers that solve complex equations to unlock access to digital currencies. Mines are also energy intensive, using large amounts of electricity to power mining rigs and fans that can run 24 hours a day.
Lawmakers also expressed concerns about foreign ownership of some mining operations, particularly Chinese ones. An Arkansas County cryptocurrency mine owned by Jones Digital, LLC is under investigation by the Arkansas Attorney General’s Office over its ties to China, potentially violating the state law prohibiting certain types of foreign ownership of agricultural land.
The House passed SB 78 by a vote of 93 to 4, while the Senate passed it by a vote of 26 to 3. The House approved SB 79 by a vote of 93 to 5 and the Senate passed it by a vote of 32 to 0 .
Bills dealing with the regulation of cryptocurrency mining and an increase in salaries of state employees were the only bills unrelated to the state budget passed by Parliament during the tax session. Lawmakers in both chambers must approve a resolution by a two-thirds majority for non-appropriations bills to be considered in a fiscal session, which occurs in even-numbered years.
A series of resolutions to consider various bills to regulate cryptocurrency mining by Sen. Bryan King, R-Green Forest, failed to reach a two-thirds majority in the House. King previously asked the governor to call a special session to regulate crypto mining and took a tough stance against the industry.
King criticized Bryant and Irvin’s bills, arguing that they did not go far enough in regulating cryptocurrency mining. Among his resolutions, King proposed legislation requiring cryptocurrency mines to provide advance notice before purchasing or leasing land for use, fees for excessive electricity, and a ban on crypto-mining computers and software made in China.
Information in this article was provided by Josh Snyder of the Arkansas Democrat-Gazette.