Cryptomining Industry Is Invading Arkansas; New “Data Center” Laws, Too

It’s an unrelenting incursion that’s recently left many Arkansans frustrated and feeling misled. Seeking minimal zoning/regulatory interference and low electricity rates, it looks like at least ten cryptomining sites have sprung up across our state in the last 18 months.

In many cases residents, mostly in rural areas, haven’t learned about their new neighbors — the new industry — until the sites are up and running, when it’s way too late to do anything at all about it.

Residents Complain

Residents across the country are complaining that cryptomining sites bring unrelenting low frequency noise as well higher energy rates and strains on the electricity grid, but Arkansans seem to be just now waking up to what’s going on. (What is cryptomining, anyway?)

Concerns at Vilonia & Harrison

While most of the new builds in Arkansas are located outside city limits and so are exempt from most regulatory measures, recent plans for new sites in Vilonia and Harrison are currently drawing the concerns of taxpayers there.

In April, the Vilonia City Council voted unanimously to allow a new cryptomining operation on Entergy Way Road. Harrison’s Planning Commission put their plans on hold after more than 150 residents filled their April 25 meeting with concerns about the issue. The Boone County Quorum Court followed on May 9 with a Resolution asking the Arkansas Legislature to “repeal or modify” recently enacted state laws about “data centers.”

Mayor Jerry Jackson has come out solidly against the proposed site in Harrison.

Legislature Promotes Cryptomining

The Boon County Quorum Court is reacting to two new “data center” bills from the Arkansas Legislature that not only promote cryptomining but also prohibit local jurisdictions from regulating this industry that’s new to our state.

Governor Sarah Sanders signed HB1799 into law (Act 851) to create the Arkansas Data Centers Act of 2023 promoting cryptomining sites and directing them to follow state business and tax laws, safety and operations ordinances, and state and federal employment laws. Act 851 also prevents local governments such as city councils or county quorum courts from “discriminating” against these businesses — that means “hands off” for local regulation. HB1654/Act 819 provides sales and use tax exemptions for such “data centers.”

(Even though both bills passed the Arkansas Senate and House overwhelmingly, at least one state Representative now says he feels “misled” by descriptions he was given before he voted in favor. The Boone County Resolution declares that the bills “were presented without sufficient time for review, research, and without the proper vetting process and clarification.”)

Supporters claim that cryptomining brings jobs and tax revenue to our state; however, opponents cite noise, environmental concerns and — most of all — the persistent involvement of Chinese companies, pointing at China that banned cryptomining in 2021 by declaring the industry “undesirable.”

Negotiated Electricity Rates & Agreements

Going on limited information, it looks like Entergy Arkansas provides electric service for most (all?) the Arkansas sites. They certainly negotiated special electricity rates for the industry; specialized agreements mandate the sites will shut down energy usage during “peak demand” times to protect the grid.

A former Entergy official, now retired, spoke at a couple of public meetings (including one in Faulkner County) to tout the benefits of having such a site because it “stabilizes” the energy grid by “utilizing excess capacity.”

In central Arkansas, some cryptomining sites are already up and running in Greenbrier, Little Rock, Morrilton, and Russellville, with new sites planned soon for Vilonia and Wooster. (We found online references to at least 11 sites.)

A new crypto powerhouse, Cryptic Farms, is parent to at least four of the new Arkansas sites, which they brought online in 2022 and early 2023. Juice Tech also has more than one location in the state (Little Rock, Newport, and Walnut Ridge).

In 2022 Cryptic Farms Managing Member Cameron Baker also started the Arkansas Blockchain Council, “a pioneering organization dedicated to promoting the adoption and implementation of blockchain technology across Arkansas” that “aims to establish Arkansas as a leading hub for blockchain development and deployment in the United States.”

Pine Bluff Says “No”

Where new sites in rural areas seem to be springing up like weeds, locations within city limits have met with different results, as the proposals are more closely reviewed, like in Harrison.

In Pine Bluff, despite spending millions to purchase and begin retrofitting the old Pine Bluff Commercial building, California real estate developer Joe Delmendo was forced to abandon his plans for cryptomining at the site after the local Planning Commission, citing complaints about excessive noise and energy use, rejected the idea outright in 2022.

Details Hard to Find

In addition to finding numerous “bitcoin ATMs” in Arkansas, we spent quite some time looking for details on the various cryptomining sites across our state — details like facility size, output expected, energy usage and even who owns or leases the facilities. It’s unfortunate those details don’t seem to be very available.

Here’s what we found so far:

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