Senate OKs resolutions focused on regulation of crypto mining

The state Senate approved a slate of resolutions Thursday aimed at regulating crypto mining, the first step needed before legislators can consider voting for the legislation.

While almost all of the resolutions senators ran Thursday passed, the votes are not necessarily an indication of support for the measures. Instead, it merely allows the resolutions to make their way to committee. The Arkansas House of Representatives also will have to approve identical resolutions for the legislation to be considered.

The Senate approved seven resolutions to regulate crypto mines, aiming to address issues that range from noise, to energy use and foreign ownership. The issues around crypto mining have had greater salience since many new operations have opened around the state in the past year.

Nearby residents have complained about noise from the crypto mines, often attributed to the loud buzzing of fans cooling banks of computers that work to solve complex equations to unlock access to the digital currencies. The mining operations are also energy intensive, using vast amounts of electricity and water to cool equipment.

There are also questions about ownership, with at least one crypto mine under investigation by the Arkansas attorney general’s office regarding ties to China, which could violate state law that bars certain types of foreign ownership of agricultural land.

The resolutions approved Thursday are to amend the Arkansas Data Centers Act of 2023, or Act 851, which prohibits localities from passing ordinances specifically aimed at regulating crypto mines.

Since overwhelmingly passing in the legislature last year, many lawmakers have expressed regrets about supporting the legislation, including Sen. Joshua Bryant, R-Rogers, one of the sponsors of the 2023 law who now seeks to amend it.

Bryant’s legislation, Senate Resolution 5, would require crypto mines to adopt sound reduction techniques, be located at least 2,000 feet away from the nearest residential or commercial building, or be moved to an area zoned for commercial use. The proposal also would allow local governments to pass crypto mine-specific noise and zoning ordinances.

The resolution calls for citizens and entities subject to the federal International Traffic in Arms Regulations to be barred from owning more than 15% of a crypto mine in Arkansas. The language is modeled after the Act 636, a law the legislature passed last year aimed at restricting Chinese ownership of agricultural land.

“I know we’ve got one shot to course correct on this issue until we meet back in 2025,” Bryant said. “I want to target the nuisances of the industry, not the nuances of the industry.”

Sen. Missy Irvin, R-Mountain View, sponsored Senate Resolution 17. The legislation would establish a 60-decibels limit on crypto mines and a 40-decibels limit on businesses that utilize a blockchain network. The proposal also bans any ownership stake in a crypto mine from someone who is subject to the International Traffic in Arms Regulations.

Irvin’s resolution also would require crypto mines to be licensed by the Arkansas Department of Energy and Environment. Future crypto mines also would not be allowed to use water cooling under the proposal.

Lastly, Sen. Bryan King, R-Green Forest, presented six resolutions looking to address a wide-range of issues related to regulating crypto mining. However, unlike Bryant’s and Irvin’s proposals, several lawmakers expressed skepticism about King’s proposals, noting concerns about unintended consequences.

“We need to have an open discussion about it, that’s it,” King said. “Our national security is at stake here. It really is.”

After voting down King’s first proposal, lawmakers changed course to approve the senator’s five other proposals after Sens. John Payton, R-Wilburn, and Alan Clark, R-Lonsdale, told lawmakers the resolutions, despite their reservations, are worth hearing in committee.

“There may be one of them that I could vote for in its current form,” Payton said of all the crypto resolutions presented Thursday. “But if we are going to take up the issue we don’t need to tie our hands on how broad or how narrow that issue should be.”

Clark said sending the resolutions to committee would provide an opportunity for representatives from electric and water utilities to come and testify about crypto mines’ extensive usage of their services.

“I don’t want to wait a year to hear about this subject,” Clark said, referring to the legislative session scheduled for 2025.

The vote for Senate Resolution 11 initially failed to get the two-thirds vote it needed, but the Senate voted later to expunge the vote so King could bring the legislation back to the floor.

The legislation calls for crypto mines to pay fees for extensive power usage. King told senators he will give them a heads-up before he brings the legislation back to the floor for another vote.

The five resolutions, sponsored by King, passed by the Senate on Thursday are:

Senate Resolution 12, which would ban the use of computers or software manufactured in Russia, China or any country on the U.S. Department of Commerce’s consolidated screening list.

Senate Resolution 13, which would require crypto mines to be licensed under the Uniform Money Services Act.

Senate Resolution 14, which would require the Arkansas Natural Resources Commission to monitor the impact of crypto mines on water usage and for the Arkansas Public Service Commission to monitor electric usage by crypto mines. Both agencies would have the authority to halt a crypto mine operation if it posed a threat to an electric or water utility.

Senate Resolution 15, which would require a notice to be filed with the Arkansas Public Service Commission and local government before a business purchases or leases land for a crypto mine.

Senate Resolution 16, which would repeal part of the the Arkansas Data Centers Act, restoring the ability for local governments to regulate crypto mines. The legislation also would prohibit ownership of crypto mines by citizens or entities from countries subject to the International Traffic in Arms Regulations.