State senator seeks repeal of new law limiting local regulation of crypto mining operations

Senator Bryan King, R-Green Forest, speaks during the Senate session in this Jan. 12, 2023 file photo. (Arkansas Democrat-Gazette/Stephen Swofford)
Senator Bryan King, R-Green Forest, speaks during the Senate session in this Jan. 12, 2023 file photo. (Arkansas Democrat-Gazette/Stephen Swofford)

HARRISON -- A state senator said he is hoping for a special session to be called to repeal Act 851 of 2023, a new law that is set to go into effect on Aug. 1 that limits the kinds of regulations local governments can implement on digital asset mining companies by prohibiting discrimination against them and requiring any regulations to treat them the same as data centers.

Many local governments, worried about cryptocurrency mines -- which are known to create disruptive amounts of noise in certain cases -- began passing noise ordinances aimed at data centers in the run-up to Aug. 1. Ambiguities in the law are also leading to concerns.

"I don't think that we can wait two years [for the next legislative session] to answer some of these questions and deal with it," said Sen. Bryan King, R-Green Forest.

King's comments came after a meeting of the state Senate's Children and Youth Committee at North Arkansas College in Harrison, which was attended by dozens of community members and members of local and county governments and featured testimony from members of the blockchain and cryptocurrency community.

Cameron Baker and Tom Hartford, the managing partner of Cryptic Farms, LLC and the head of the Arkansas Blockchain Advisory Council, respectively, spoke in favor of regulations on the state's cryptocurrency industry, and touted the council's work in vetting blockchain companies.

"The things that we're doing are unambiguously pro-industry," Baker said. "What our intentions when originating this bill, it was originated as an anti-discrimination bill. What we were trying to do was say, 'Hey, look, we're pretty much a data center. As long as you treat us like a data center, you know, we're not restricting your ability to manage your commercial policy."

Baker's reasoning was questioned by some members of the committee, who asked about how localities and the state itself would benefit from Act 851, and whether the crypto industry should have special protections.

"Farmers can be run out of business at any time with regulations, you know. Any business can. And for you to have special protections to say that you shouldn't be able to -- all I'm saying is you should be retracted back to what everybody else is trying to do," King said.

King, who filed an interim study bill to repeal the act in May, said local communities have been "blindsided" by digital asset mining companies.

Liz Torgerson, a member of the local community who has been involved in opposing cryptocurrency mining in Harrison, had multiple concerns ranging from environmental to economic in her opposition to the industry.

"My concerns about having it here are, one, the noise pollution -- what it does to people, livestock and wildlife," she said. "Second, the electrical usage -- what's that going to do to all our businesses here in town. Also, it does not bring any jobs to this town. ... I don't think they're going to hire anybody around here. They're gonna bring in their own people, to protect it."

The vice chair of the committee, Alan Clark, R-Lonsdale, asked Baker to explain the overarching purpose of the act, which Cryptic Farms and the Arkansas Blockchain Advisory Council pushed for. Baker said that he thought the act was a "soft touch," with the intention of starting conversation about regulations.

"The intention there is, of course, to securitize the industry's position and growth here. That is something you said from the beginning -- I want my investments here to be safe, so of course, things are always going to be oriented in that manner."

Clark questioned their stated approach of passing a bill to start a conversation.

"I have filed a lot of bills to start a conversation. I don't pass them and make them law to start a conversation," Clark said.

Nancy Cartwright, the Harrison city attorney, also spoke, saying the ambiguity in the law is making it difficult for her and her office to prepare for a denied crypto operation to refile to establish a mine once the law goes into effect.

In an interview after the meeting, King said he invited the sponsors of Act 851 to speak at Monday's meeting, but they declined.

"It's unfortunate that the bill that got passed, got passed in the way that it did," King said. "It's a breakdown in the Legislature when people were not informed and don't know the process, and we found out later what happened."

King also addressed the concerns about Chinese and other foreign companies coming in to operate mines in the state.

"We spent a considerable amount of time in the [legislative] session -- concerns about Chinese influence with TikTok and ... drones from China. And then all of a sudden, we let this go," King said.