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Arkansas Bill Takes Aim at Crypto Mining as Other States Deregulate

Energy-hungry cryptocurrency mining operations have caught the attention of state and federal lawmakers. While some welcome the operations, others are taking a more critical look at what they bring to the table.

A worker adjusts equipment in a cryptocurrency mining operation.
Cryptocurrency mining has emerged as a complex and controversial legislative topic for lawmakers across the country.

On one hand, the rapid growth of digital mining operations is heralded by advocates for its presumed economic benefits and associated job opportunities. Critics, meanwhile, detail concerns over the environmental impacts of energy-intensive mining activities and their long-term sustainability.

In Arkansas earlier this year, House Bill 1799: Arkansas Data Centers Act of 2023 was passed, relaxing regulations on commercial cryptocurrency mining and prohibiting government from imposing different requirements on cryptominers than other data centers. One state senator raised concerns about procedural aspects of the bill’s introduction and the potential environmental consequences that the legislation could bring.

“The Data Centers Act was passed under a batch of bills, which I am critical of because a lot of people didn’t know specifically what they [were] voting on,” Sen. Bryan King said. “In addition, the energy used by these types of centers is astronomical, especially when you compare it to the minuscule amount of jobs it does create.”

King recently introduced a bill aimed at repealing the legislation, although a committee declined an interim study on the proposal. It will not officially be brought forward for review until the 2025 legislative session, he said, unless his request for a special session is recognized.

Lawmakers in Washington, D.C., appear to share similar environmental concerns about the mining practices. In September 2022, President Joe Biden released a fact sheet on climate and energy implications for cryptoassets. The report revealed that cryptocurrency accounts for 0.9 to 1.7 percent of the nation’s electricity usage. “It could potentially hinder broader efforts to achieve U.S. climate commitments to reach net-zero carbon pollution,” the administration noted.

However, states across the country have passed laws both in support of and against cryptomining. Earlier this year, Montana passed Senate Bill 178 prohibiting discriminatory utility rates for digital mining operations and the taxes on cryptocurrency used as a payment method.

Missouri and Mississippi also attempted measures to curtail state-level regulatory interventions on cryptocurrency mining. These proposed laws included provisions that prevented state agencies from establishing what are termed as “discriminatory rates” for businesses engaged in digital asset mining. Neither bill passed.

Others have not been as willing to accommodate the emerging industry. Last year, New York Gov. Kathy Hochul signed a bill into law that temporarily paused the issuance of new permits for fossil fuel power plants that include proof-of-work cryptocurrency mining due to environmental concerns.

Oregon, in a similar move, proposed HB 2816, requiring anyone who “owns, operates or controls high energy use facilities must ensure greenhouse gas emissions associated with electricity used by these facilities are reduced to 60 percent below baseline emission levels by 2027.”

Some advocates for the deregulation of cryptomining believe doing so would negatively impact the local economy by causing these businesses to move elsewhere. In a press release last year, Missouri state Rep. Phil Christofanelli articulated this point while introducing a pro-crypto bill, stating, “This industry has great potential to enhance Missouri’s push to create greater economic freedom and ensures my state is open to innovation such as cryptocurrencies and blockchain applications coming to the market.”

However, King questions whether the rewards of cryptomining actually outweigh its disadvantages.

“I don’t believe this has anything to do with economic development. While there’s more research needed to measure this, we’ve discovered that the crypto facility proposed in Arkansas would use enough power for 7,000 or 8,000 homes, while only employing two or three people,” King said. “A lot of times whenever these facilities are placed and energy usage goes up, it’s basic economics that citizens’ energy rates go up as well.”

While Arkansas welcomes new businesses and embraces new technology, King said, lawmakers must also weigh the benefits versus the potential adverse effects on citizens and their communities before implementation.
Ashley Silver is a staff writer for Government Technology. She holds an undergraduate degree in journalism from the University of Montevallo and a graduate degree in public relations from Kent State University. Silver is also a published author with a wide range of experience in editing, communications and public relations.