Bitcoin Miner Wins a Round In DeWitt, but Fight Goes On

This bitcoin center in Faulkner County has drawn complaints since last summer. A new site in DeWitt is stirring opposition. (Madison Ogle)

Days after Jones Digital LLC won a preliminary court ruling and said it would be opening a bitcoin mine in DeWitt within weeks, a local coffee shop owner and opponent of the plan conceded one point: Other industries in Arkansas County make more noise.

But the bitcoin mine noises are constant and high-pitched, and the operation doesn’t support the local economy as other noisy businesses do, Tammy Hornbeck told Arkansas Business the day before Thanksgiving.

The businesswoman is rallying opposition to the facility, which uses water and electric fans to cool the bitcoin-making servers in customized shipping containers.

“We have rice mills and other industries in our area that do produce a lot of noise, but all these facilities … are regulated so that they can’t operate at night if there’s a sound above a certain level,” Hornbeck said.

These other companies “employ people and provide to our local economy,” she said. “This particular industry [crypto mining] does not employ anyone from our community.”

Jones Digital LLC won a preliminary injunction last month preventing Arkansas County from enforcing a stricter sound ordinance enacted on Oct. 10. U.S. District Judge Lee P. Rudofsky found that the ordinance, which strengthened decibel limits set in July, ran afoul of a state law, Act 851 of 2023. That law limits local authorities from “discriminating” against data centers by imposing local restrictions.

A county sound limit set in July is 65 decibels in the day and 55 decibels at night. The October limit, now unenforceable, was 55 decibels by day and 45 decibels at night. County Judge Thomas Best told the Arkansas Democrat-Gazette that trying to set the limit at 45 decibels, “even at night, was too much; at least that’s what the judge said so that’s what we’ll go with.”

Reasons for Dissent

Digital currency mines and plans for them stirred controversy throughout 2023, and cities and counties raced to apply limits before the new law took effect Aug. 1. Arkansans expressed concerns about heavy power use, environmental impacts and Chinese ownership of facilities drawing hunks of energy from the electric grid.

The Arkansas Secretary of State’s office lists Yizheng “Ethan” Wang as manager of Jones Digital. Wang is also incorporator/organizer and registered agent of Bono Management Inc., the company that owns a bitcoin mine near Greenbrier that has drawn many complaints. Wang’s business card identifies him as business development director of Metahash Global.

Judge Rudofsky noted that Jones Digital was willing to abide by the July ordinance, and he heard testimony at a Nov. 17 hearing that sound levels from tests during preliminary operations at the DeWitt bitcoin mine pose no risk to humans and aren’t nearly as loud as operations at other nearby enterprises.

But Hornbeck said the facility’s noise is fundamentally different. It’s a constant “high-pitch squeal,” she said. “We’re concerned about the quality of life for property owners who live or work close to this site. They’re going to have to endure that 24/7. And what is it going to do to wildlife? How is it going to affect family hunting grounds?”

Lawyers from Wright Lindsey & Jennings of Little Rock represented Jones Digital, and said the court hearing dispelled rumors that the mine would pollute the area or affect its significant duck hunting industry.

Attorney Alexander Jones said Judge Rudofsky gave the county a chance to present evidence of potential harm, but the court found no proof.

“The hearing revealed that the project has a closed water system that will discharge nothing into the watershed,” he said. “Even at peak operation, any noise would be far below anything that could damage hearing. In fact, it will generate far less noise than other ongoing commercial operations in the county, like Delta Plastics and Riceland Foods, or even routine highway traffic from Highway 165.” The judge found no evidence that wildlife would be at risk, Jones said.

ADEQ Inspection

The Arkansas Department of Environmental Quality found several violations in an inspection of the Jones site last month.

“They discovered that [Jones Digital] had falsely represented the amount of land, which they had said was less than 1 acre,” Hornbeck said.

William J. Ogles of Wright Lindsey & Jennings, who also represents Jones Digital, said it initially ran into an issue getting a construction stormwater general permit, but “remedied the situation” by getting “proper permitting prior to the ADEQ inspection.”

He said the actual cryptocurrency site is less than an acre. “However, the construction site is a little larger,” Ogles said, less than 2 acres. But the bigger construction site did prompt the need for the construction stormwater permit, he said. Ogles said ADEQ identified minor issues that were not specific to crypto mining.

“The Department simply advised that silt fencing around the construction site needed to be completed, along with the installation of some ‘riprap’ rocks around the entrance to prevent erosion, and lastly that a dumpster was needed on the site.” Ogles said those issues are common to many construction sites, and that “our client has already taken the necessary steps to fully comply with ADEQ’s recommendations.”

Hornbeck said she and her committee would continue to fight crypto mine plans in Arkansas. She also hopes for a repeal of Act 851.

“It totally took away any authority from our county government and city government to regulate these facilities,” she said. “It’s like they’re above the law. Other businesses and industries in our area have to abide by regulations, and they pay sales taxes.”

Security Concerns

“We’re concerned that we don’t have any way to defend our county,” Hornbeck said. “People are concerned that these businesses are foreign-owned and associated with security threats. In light of the news yesterday with the world’s largest cryptocurrency exchange being busted, I think our security worries are warranted.”

She was referring to Binance, the world’s largest cryptocurrency exchange platform, which admitted to breaking federal laws and failing to prevent money laundering. It agreed to pay $4.3 billion in fines and fees, according to the Justice Department. CEO Changpeng Zhao pleaded guilty to a federal charge and resigned his job.

Binance admitted that it failed to prevent money laundering on its platform and allowed traders in nations under sanctions by the federal government, including Iran, to do business with Americans.

Some Arkansas County residents see an irony. State law prohibits Chinese ownership of Arkansas farmland, but forbids “discrimination” against bitcoin mines, even though some have ownership traced back to Shanghai.

“On the surface, [Act 851] seems to be a freeway for the crypto mining industry to come in here and do whatever they want,” Hornbeck said. “There’s no one to keep check on them and they don’t have to be accountable. It just doesn’t seem fair.

“We’re strongly urging our governor and our legislators to call a special session and revisit this act and repeal it, or at least put some sort of regulation in place on this industry.”