Arkansas Moves to Restore Local Control Over Crypto Mining

Arkansas lawmakers are pushing to modify the 2023 Arkansas Data Centers Act, a law that currently restricts local governments from regulating cryptocurrency mining operations. Sen. Bryan King has introduced several resolutions during the current fiscal session aimed at restoring local control and addressing environmental impacts [2].

Key takeaways

• The Arkansas Data Centers Act passed in 2023 with bipartisan support but is now facing renewed scrutiny from legislators [2].
• Sen. Bryan King filed six resolutions seeking to allow local governments to regulate crypto mines and impose fees for electricity and water usage [2].
• Residents in Faulkner County have filed a federal lawsuit regarding excessive noise from a crypto mine established after the law's passage [2].

Legislative efforts to amend the 2023 law

The Arkansas Data Centers Act was introduced shortly before the end of the 2023 legislative session and passed both chambers with bipartisan support [2]. However, Sen. Bryan King, a Republican from Green Forest, argues the bill passed with too little scrutiny and has spearheaded an effort to alter the statute [2]. During the fiscal session, which typically limits lawmaking to fiscal matters, King filed six resolutions—Senate Resolutions 7 through 12—that would roll back significant portions of the law [2]. Rep. Ron McNair, an Alpena Republican, has sponsored identical resolutions in the House [2].

The proposed measures address various aspects of the industry, ranging from local governance to resource consumption. Senate Resolution 7 would explicitly allow local governments to regulate crypto mines and prohibit ownership by entities from specific foreign countries [2]. Senate Resolution 8 would require cryptocurrency businesses to pay a fee to the Department of Energy and Environment for "extraordinary electrical energy usage" [2]. Additional resolutions seek to ban the use of foreign-manufactured computer equipment, require miners to obtain money transmitter licenses, mandate six months' advance notice before purchasing land, and authorize the Arkansas Natural Resources Commission to monitor water usage [2].

Proposed regulations and community concerns

King stated these regulations are necessary to "get it back to local control" and determine if operations will stress the electrical grid, raise electric rates, or drain water supplies before facilities are established [2]. The push for change follows a federal lawsuit filed by Faulkner County residents in 2023 over excessive noise from a crypto mine built after the act's passage [2]. Both King and McNair represent Harrison, an area where out-of-state entities have shown interest in developing crypto mines in recent years [2].

Why it matters

The legislative debate highlights a growing tension between state-level economic incentives for the crypto industry and local concerns regarding infrastructure and quality of life. Because the current session is reserved for fiscal matters, passing these non-budgetary bills will require a two-thirds vote in each chamber [2]. While Senate Minority Leader Greg Leding noted that fiscal sessions usually focus on budget issues, he acknowledged that King's proposals might warrant consideration given the limited opportunities for regular legislative sessions [2].