Two bills are advancing as lawmakers debate solutions

Lawmakers on Thursday debated for the first time two new bills to regulate cryptocurrency mining in Arkansas.

Members of the Senate City, County and Local Affairs Committee posed questions about the two bills to sponsors Sen. Missy Irvin, R-Mountain View, and Sen. Joshua Bryant, R-Rogers, before both were approved.

Both bills would strike parts of 2023’s Act 851, which prevents local governments from enacting sound ordinances specific to crypto-mining, among other restrictions, and adding other regulations. They will also declare Arkansas’ crypto mining boom an “emergency.”

One bill, sponsored by Irvin and Rep. Jeremiah Moore, R-Clarendon, would impose noise limits and impose soundproofing, ban crypto facilities from using water to cool servers and ban citizens of countries listed in the International Traffic in Arms Regulations from owning crypto mining. operations in Arkansas.

The other, sponsored Bryant and Rep. Rick McClure, R-Malvern, would require soundproofing as well as requirements for a minimum distance from nearby structures and similarly exclude certain foreign nationals from countries with International Traffic in Arms Regulations.

It will also add protection for individuals who mine cryptocurrencies in their home as a hobby.

The two senators, Irvin said before the committee Thursday, worked together to make sure aspects of their respective bills, including restrictions on foreign ownership, were compatible.

The committee debate

Cryptocurrency is a digital commodity that can be used as payment like money and can be traded like stocks. Crypto is stored in an online log or ledger called the blockchain, where all crypto transactions are permanently recorded.

Crypto transactions must be verified and recorded by powerful computers in a process that involves solving complex equations, which also creates new units of cryptocurrency.

John Bethel, director of public affairs at Entregy, spoke about the restrictions that would be placed on cryptominers’ electrical use and the effects of cryptomining on the electrical grid under the proposed legislation.

Ken Graves, chairman of the Arkansas Rice Growers’ Association, and Jerry Lee Bogard, an irrigation consultant, both expressed concern that crypto mining consumes too much water and harms the aquifer.

Senators addressed issues including doubts about crypto mining facilities being located too close to military installations, the effectiveness of penalties intended to deter crypto miners from violating rules on energy use, the perceived dangers of foreign ownership and the ways in which crypto- operations utilities may affect services for nearby farmers.

Several senators have made it clear that they are sympathetic to the bills, or at least skeptical of crypto-mining to some extent.

“Can you tell me what a crypto mine produces in relation to what is essential to human life?” asked Sen. Gary Stubblefield, R-Branch, at one point.

“Nothing,” replied Bogard.

“There are people invested in crypto in Arkansas,” Sen. Dan Sullivan, R-Jonesboro, said. “I take small exception to the answer that it has no value. We don’t know what the value is yet. It could be upside, it could be downside, it’s probably a combination of both. But I hate it to demonize them too long before we know the answer to that.”

“Were there a large number of Arkansans invested in Enron?” Stubblefield asked in response.

How did we get here?

Because the General Assembly is in a fiscal session, usually reserved for budget legislation, there were several additional steps to get a piece of legislation before lawmakers. The House and Senate both had to pass resolutions, one for each possible bill, by a two-thirds vote before lawmakers could introduce the bills.

The bills in committee Thursday are based on the only resolutions, out of eight, that passed in both the House and Senate.

Seven out of eight passed in the Senate last week, but only the two made it through a House vote on Wednesday.

Arkansas, with its cheap, abundant land and electricity, is an excellent location for crypto mining and many operations have sprung up in recent years.

Crypto mining computers consume large amounts of electricity. They also produce heat and must be cooled either by powerful cooling fans, which can be very loud, or by circulating water drawn from wells.

Act 851, a law passed by the General Assembly last year, prevents local governments from regulating many aspects of crypto facilities’ operations, including noise and zoning.

The law passed quickly and easily in 2023, but has since seen a strong backlash as its provisions, which many lawmakers say were poorly understood at the time, have become more widely known.

The other six measures

All of the resolutions that failed Wednesday’s vote in the House were sponsored by Rep. Joshua Miller, R-Heber Springs.

They reflect the six resolutions that Sen. Bryan King, R-Green Forrest, introduced one of the leading voices in the General Assembly to the Senate, criticizing Act 851 and advocating for tighter controls on the new and booming industry. Five of those six passed the Senate last week.

“I was really surprised that there was such strong opposition” in the House, Miller said Wednesday. He said he thought it might be because those six were considered further along than the two who did pass.

“It may not be everything I wanted,” he said of the two bills in committee, “but at least it will be a step in the right direction.”

“I will support anything that moves the needle.”

“I hope that a good, reliable solution to all these problems will be found within the boundaries of the other two resolutions,” Miller said.