Arkansas Tightens Grip on Bitcoin Mining: New Bills Aim for Regulation

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At this writing, the Arkansas Legislature appears headed toward revising a law it passed last year to protect bitcoin mining operations, and to subject them to state regulation.

The Senate passed a bill by Republican Sen. Missy Irvin of Mountain View, SB 79, that will require bitcoin mining companies to register with the Arkansas Oil & Gas Commission. The state will know who owns bitcoin mines, where they are and how they work — information that authorities do not track now.

SB 79 will impose important state oversight to the mines, which have infuriated neighbors with the noise they make, the amount of electricity and water their cooling systems use, and the risks their foreign ownership might pose to national security.

The crypto mines have to cool thousands of computer modules that solve complex mathematical problems in proving the worth of bitcoins. Electric fans are standard, and some crypto farms use closed-loop cooling with both fans and water Some immerse their equipment in liquid.

Critics say the mines disrupt lives, frighten wildlife and could drive up their electricity bills. The hubs employ few local workers, and allowing foreign ownership of big chains of U.S. bitcoin hubs is like “giving China an outlet right next to our power supply,” Republican Sen. Bryan King of Green Forest told Arkansas Business.

SB 79 and SB 78, by GOP Sen. Joshua Bryant of Rogers, would give Chinese owners of Arkansas bitcoin operations a year to divest all interest in them, and would roll back aspects of a bitcoin nondiscrimination law that Bryant sponsored last year, Act 851 of 2023.

King sees SB 78 as a mere Trojan horse from the bitcoin industry to ward off stronger regulations.

King and Democratic Sen. Stephanie Flowers of Pine Bluff grilled Bryant on the Senate floor before SB 78 passed April 25 in a 26-3 vote. Irvin’s bill to require state oversight passed 32-0. The House was expected to pass both bills and send them to Gov. Sarah Huckabee Sanders after Arkansas Business’ deadline last week.

King said Bryant “ran” from the well of the Senate on April 24 before facing additional questions about his bill. Minutes before, King had asked Bryant about the use of shell companies to disguise Chinese ownership of bitcoin mines. Bryant conceded he had visited only one center, a domestically owned Cryptic Farms operation southwest of Little Rock.

Flowers asked if Bryant knew of reports that Arkansas has 18 crypto mines, including 12 associated with foreign ownership. He responded, “I do not know, Senator, those actual numbers.”

When Flowers suggested that Bryant didn’t know “much about anything” before filing last year’s law, Bryant replied: “I knew I wanted to protect property rights and individual rights that deal with the industry administratively. I did not want to debate these ideologically. I wanted to stay in the administrative areas of property rights and the ability to operate an existing facility and within applicable laws and protect them for future use.”

King suggested in an interview that the Satoshi Action Fund of Oxford, Mississippi, had helped craft SB 78. Founded by Dennis Porter and Mandy Gunasekara, the 501(c)(4) nonprofit says it works “with lawmakers and regulators as well as the general public to ensure that Bitcoin is adopted … .”

“It just flat out doesn’t pass the smell test,” King said. “I feel like they [Satoshi Action Fund] should disclose their donors. In politics, you’ve got to follow the money.”

In this case, King said, “we can’t follow the money.