Federal judge issues injunction in cryptocurrency mining dispute between Jones Digital and Arkansas County

In a recent legal development, U.S. District Judge Lee Rudofsky presided over a dispute involving attorneys representing Jones Digital LLC and Arkansas County on Nov. 17. The disagreement stemmed from Jones Digital’s claim that a county ordinance unlawfully impacted an ongoing cryptocurrency mining operation. As outlined in a complaint filed in the federal court of Arkansas’ Eastern District, an amendment to a noise ordinance, passed by the Arkansas County Quorum Court in October, imposed noise restrictions in violation of the state law enacted during the last legislative session. This state law, known as the Arkansas Data Centers Act or Act 851, prohibits local governments from passing discriminatory laws against cryptocurrency mining operations.

Arkansas County Judge Eddie Best explained that in July, the Quorum Court had enacted an ordinance setting limits for daytime noise from businesses at 65 decibels and nighttime noise at 55 decibels. However, in October, an amendment was passed, lowering the daytime noise limit to 55 decibels and nighttime noise to 45 decibels. Best acknowledged that while the court agreed to uphold the July ordinance, the October amendment was deemed excessive. He noted that the amendment aimed to address concerns about potential negative impacts on migratory birds and waterfowl in the region, with duck hunting being a significant source of revenue for Arkansas County.

When it was announced in July that a crypto-mine would be setting up just outside DeWitt’s city limits, locals widely opposed it, expressing concerns ranging from energy usage and potential environmental damage to the possibility of a national security threat posed by the suspected foreign ownership of the crypto-mine.

A transcript from the Nov. 17 hearing, filed on Nov. 20, revealed Judge Rudofsky’s bench ruling, declaring the October ordinance as discriminatory and a violation of state law. Rudofsky expressed concern that Arkansas County had noise requirements solely for digital asset mining, suggesting that such discrimination could be preempted by law. He emphasized that evidence indicated the sufficiency of the July ordinance in protecting wildlife. Regarding the more restrictive October amendment, the judge deemed it “more likely than not” that Jones Digital would succeed in the case, leading to an injunction against Arkansas County officials from enforcing the amendment.

During the hearing, which lasted into the evening, the County was allowed to present evidence supporting rumors that had alleged grave impact on humans, wildlife, and the environment. However, the Court found no proof of any harmful environmental or health effects.

In his formal opinion, Judge Rudofsky noted that Jones Digital had committed on July 19 to complying with the sound requirements of that month’s ordinance and that the noise levels specified in the July ordinance posed no harm to humans or wildlife.

In a press release, Jones Digital’s attorney Alex Jones of Wright, Lindsey & Jennings LLP said, “Jones Digital now looks forward to working with the Arkansas County community and putting this chapter behind them. Our client has pledged to be a responsible neighbor, a timely taxpayer, and a business that will give back to DeWitt and other communities in Arkansas County.”

A bench trial for the case has been scheduled for Jan. 14, 2025, at the federal courthouse in Helena-West Helena. Rudofsky instructed the parties to submit a Rule 26(f) Report outlining their discovery plan by Feb. 12.