Key Takeaways:
On May 1st, the House of Representatives of Arkansas passed two bills to regulate cryptocurrency mining activities in the American state.
Senate Bills (SB) 78 and 79 which restrict certain activities relating to crypto mining are now headed to Governor Sarah Huckabee Sanders’s desk to be signed into law.
Arkansas House of Representatives Pass Bill To Regulate Crypto Mining Industry
Both bills address the shortcomings of last year’s Act 851, the Arkansas Data Centers Act 2023, which set a favorable regulatory environment and established clear definitions and guidelines for crypto miners operating in the state.
The act included provisions that sought to protect the industry from “discriminatory regulations” and ensure their equal treatment as data centers. However, the bill received heavy criticism for limiting the local government’s oversight of the business, with many members of the general assembly stating that they didn’t fully understand the context of the law when it was passed.
Crypto mines face major criticism for the loud noise they often produce as well as the large amounts of water and electricity they consume. Many lawmakers voiced concerns that the facilities could put a strain on the state’s already overtaxed aquifers and potentially overburden its energy grid.
SB 78 and 79 Imposes Local Government Control While Prohibiting the Ownership of Mining Farms by China
Senate Bill 78 took into consideration the concerns of local officials and residents living in close vicinity to crypto mining farms by imposing noise limits on their operations. The bill also regulates the usage of water for cooling the machinery, prohibits the facilities from being owned by foreign entities, specifically China, and restores the local government’s control over their regulation.
Meanwhile, SB-79 establishes a state-wide licensing and regulatory system for crypto-mining farms that will be overseen by the Oil and Gas Commission under the Department of Energy and Environment.
Nonetheless, the bills continue to restrict the regulatory power of local governments when it comes to home crypto mining by individuals or rezoning areas where crypto mining businesses are located.
The two bills, which amend the Arkansas Data Centers Act, are now headed to the office of the state governor Sarah Huckabee Sanders, who is expected to sign them into law.
According to the Associated Press, Representative Andrew Collins, who voted against the bills, raised concerns about the wording of the limit and how it could impact foreign investment in Arkansas’s growing economy. He said the legislation is “going to catch people up who are totally innocent” and would miss out on a lot of people who are “either home-gown or are from countries not on this list”.
Representative Justin Gonzalez, who also voted against the bills, said in an interview on Wednesday that it will allow local governments to discriminate against a business “just because of what it is”.
On the other hand, Representative Jeremiah Moore, who sponsored SB-79, lauded the state’s emerging crypto-mining industry, and added “We’ve never seen anything quite like this in our state before”.
A spokesperson for Governor Huckabee Sanders told the media that she “strongly supports” outlawing foreign adversaries from owning crypto mining farms in Arkansas while protecting rural communities and “empowering them to crack down on bad actors”.
President Biden Wants Bitcoin Miners to “Pay Their Fair Share” for Costing the Environment
Crypto mining has become a hot topic of discussion in the United States. Last month, President Joe Biden asked Congress to follow in the path of China and take strict action against the industry.
Rather than adopting a business-friendly approach, last month the White House reintroduced a controversial proposal from last year – the Digital Asset Mining Energy Tax (DAME) – to impose a 30% excise tax on the cost of electricity used for cryptocurrency mining.
At the time, Senator Cynthia Lummis of Wyoming noted in an X post that the proposed punitive tax would destroy “any foothold” the industry has in America. The Biden administration said it intends to make miners “pay their fair share” of the costs imposed on local communities and the environment.
In 2022, the Bitcoin mining sector in the US grew from a mere 3.4% to 37.8% of the global market, making the country the world’s largest handler of the Bitcoin network. America’s dominance in the business was fueled by miners moving their operations in mass from China to various states such as Texas, New York, and Arkansas after Beijing imposed a complete ban on crypto mining in 2020.
At the time of writing, Bitcoin (BTC) is trading at $59,554 – up 3.8% in the last 24 hours.
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