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State Law Taking Effect in August Protects Mining Operations

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A state law to prohibit “discrimination” against cryptocurrency mining operations passed during this year’s legislative session and will take effect on Aug. 1.

The Arkansas House and Senate overwhelmingly approved Act 851, the Arkansas Data Centers Act, in April. Sponsors Rep. Rick McClure, R-Malvern, and Sen. Joshua Bryant, R-Rogers, argued that it will “clarify the regulation of the digital asset mining business” and allow for the “future growth” of the centers in Arkansas.

“Basically, what this bill does is set some boundaries and guidelines for future growth of all data centers, which will include digital asset mining as well,” McClure told legislators during an April 3 meeting of the House Advanced Communications & Information Technology Committee.

Among its supporters was Cameron Baker, owner of Cryptic Farms LLC of Malvern. Baker spoke as a witness for the bill before the General Assembly.

Baker’s is one of several companies that have established or are seeking to establish mining centers in Arkansas. Other centers are operating in Little Rock, Morrilton, Newport, Russellville and Faulkner County.

Neither McClure nor Bryant returned Arkansas Business’ calls or emails for comment.

The act says that digital currency mining operations, which are often noisy because of fans used to cool computer equipment, are as legitimate as data centers and should be free from discrimination by local governments.

“As businesses come in and start to operate, they want to make sure that local zoning laws don’t increase, which therefore would cause them to have to cease operations or  change how they do business,” Bryant said in a Senate committee meeting.

The act states that a local government cannot limit “the sound decibels generated from home digital asset mining other than the limits set for sound pollution generally.”

“Basically, all this says is if they are already operating [within the decibel limit], you can’t go back and unzone and rezone something that’s already operating,” McClure said. He also said that, at the county level, regulation is up to the quorum courts.

The effective date of Aug. 1 has many city and county governments racing to enact restrictions in the meantime. They argue that the law will prevent them from regulating commercial crypto mines, and they note that some companies are Chinese-owned and could possibly pose a security risk to power grids. Cities have called for a special legislative session to rescind or alter the law.

Harrison City Attorney Nancy Cartwright told KATV-TV, Channel 7, of Little Rock that she would like to think legislators simply didn’t understand that they were tying the hands of local governments.

“I’m unfamiliar with any other provision in Arkansas law that sets aside such a narrowly defined industry and gives it such favor,” Cartwright said.

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