A Senate committee on Tuesday voted to advance two amended bills aimed at imposing further restrictions on cryptocurrency mining in Arkansas.
Senate Bill 78 and Senate Bill 79 are sponsored by Sen. Joshua Bryant (R-Rogers) and Sen. Missy Irvin (R-Mountain View), respectively. The Senate Cities, Counties and Localities Committee voted to approve the bill's amendments on Thursday, but asked lawmakers to return to the committee on Tuesday to ensure the public has an opportunity to comment on the bill.
The Senate voted in favor of Bryant's amendment early Tuesday, prompting Irvin's bill to provide commissioners with a strict definition of a blockchain network, in response to a request by Irvin to the City, County and Local Affairs Committee. It was approved to re-commit.
Bryant's bill would restore local control to counties by repealing portions of the Arkansas Data Center Act of 2023 (Act 851). Mr. Bryant sponsored this law, but he has since expressed his regret for it.
It would also establish standards requiring the use of noise reduction technology for cryptocurrency mining. Examples include enclosing noisy equipment in a completely sealed envelope, using liquid or submersible cooling, and locating it 2,000 feet from the nearest residential or commercial facility.
Bryant's amendments aim to narrow the bill's definition of “closed structure” and align foreign ownership language to be consistent with similar provisions in Irvin's bill. . It also clarifies when property owners are eligible to sue in circuit court to enforce noise abatement techniques.
Senate Bill 78 has remained unchanged since a revised version was introduced in committee Thursday, passing for the second time.
Irvin's bill aims to provide a basic framework for the state to monitor cryptocurrency mining in conjunction with local governments. New amendments introduced and adopted on Tuesday narrow the bill's definition of “digital asset mining operations” to clarify that it refers to operations in the cryptocurrency mining industry that utilize blockchain networks.
The bill defines a digital asset mining operation as “a group of computers operating at a single site that consumes an average of more than 1 megawatt of electrical energy per year for the purpose of generating digital assets by securing a blockchain network.” There is. It defines a blockchain network as “a group of computers working and processing together to implement a consensus mechanism to agree and verify data in digital records for the purpose of generating digital assets.” These digital assets include cryptocurrencies, virtual currencies, and “native electronic assets.”
Under both bills, prohibited foreign party-controlled businesses include businesses in which a foreign party has “more than zero percent ownership.”
The bill defines a prohibited foreign party as an individual, political party, or government that is subject to the International Traffic in Arms Regulations, a federal regulation designed to restrict the sale and purchase of arms to and from certain foreign governments. doing. Many members of Congress have expressed concern that some crypto operations may have ties to China or other adversaries of the United States.
The proposed bill also specifies that civil penalties and damages received by the Attorney General's Office under the foreign party-controlled business provisions would be split 50-50 between the State Oil and Gas Commission Fund and the Attorney General's Office.
The bill provides for one year prior to the effective date to operate a foreign party-controlled business and sell all interests in the digital asset mining business.
When Sen. Terry Rice (R-Waldron) asked why he would give such a company a one-year permit, Irvin said the original law would have limited it to 120 days. But he made the change at the request of Arkansas Attorney General Tim Griffin's office. Irvin said the attorney general cited precedent as the reason for the request.
Rice asked whether the decision took into account whether the changes would make it more difficult for authorities to respond to “hostile invaders among us.”
“We live in a very uncertain world,” he said.
Mr. Irvin responded that he and Mr. Bryant used the language proposed by Mr. Griffin's office “to give us the strongest legal position,” but that “we probably need to address that potentially.” I think so,” he added.
No members of the public spoke on either bill during the committee meeting.
During the full Senate session, Sen. Brian King (R-Green Forest) asked Bryant how a provision in Senate Bill 78 changes the status quo regarding when property owners are eligible to sue in circuit court. He said he couldn't understand. He said crypto mining companies “always” file lawsuits in federal court.
“They want to fight everything in federal court, but that takes longer and costs more.” [and is] “For the average citizen, it's hard to beat the best, most expensive lawyer you can hire,” he said.
Bryant responded that property owners with the right to sue “can choose the court they want to choose.”
“But if the crypto industry chooses to sue in federal court, that is their choice,” King said.
Mr. King also asked why the portion of Mr. Bryant's bill regarding what it means to “completely enclose” for noise abatement purposes relies in part on industry standards.
The proposed bill would require such envelopes to be made of “materials reasonably calculated by industry standards to reduce noise emissions to levels acceptable to a reasonable person under similar circumstances.” It states that it must be done.
According to Bryant, the language in this section was proposed by the Arkansas Association of Counties, based on the County Judges Association, to ensure that there is documentation to support why cryptocurrency mining operators want to use a particular enclosure. It is said that it is a thing. He said Faulkner County Judge Allen Dodson made the initial recommendation.
King introduced six resolutions related to cryptocurrency mining at the start of the fiscal session. His resolution initially passed the Senate, but the Miller resolution, introduced in the House by Rep. Josh Miller (R-Heber Springs), was rejected by House members on April 17.
The Senate will reconvene at 1 p.m. today to consider Bryant and Irvin's bill again.
