The last time Arkansas Business dug into the state’s growing digital asset mining operations, in July, cities and counties were resisting them, criticizing their noise, huge power appetites and often shadowy foreign ownership.
Faulkner, Clark and Van Buren counties were racing to set local limits before a state law, Act 851, went into effect Aug. 1, outlawing county and municipal “discrimination” against crypto mines.
These are warrens of connected shipping containers or warehouses filled with thousands upon thousands of computer servers. The computers, often cooled by loud buzzing fans, solve complex mathematical puzzles to verify blockchain transactions and create new bitcoins, with the miners keeping a fraction of each.
Early last week, a bitcoin was worth more than $28,000, down from more than twice that much in November 2021 but still a pretty penny.
“Solving these puzzles has no other benefit to humanity,” said Eswar Prasad, a senior fellow at the Brookings Institution. Prasad told Arkansas Business that the price is “a strong economic incentive” to burn through megawatts of power that could serve more positive economic pursuits. “By some estimates, 1% of the world’s electricity is now devoted to cryptocurrency mining,” he said, calling it “a misguided and environmentally destructive race to the bottom.”
Now concerned citizens in DeWitt are fighting plans for more bitcoin mining, and state Sen. Bryan King, R-Green Forest, and Arkansas Rice Growers Association Chair Kenneth Graves have joined their cause.
A citizens group met last week to voice opposition to digital asset mining in Arkansas County, and citizens are asking Gov. Sarah Huckabee Sanders to call a special legislative session to repeal Act 851.
Asked about crypto mine concerns in Arkansas County, the governor’s office said Sanders’ top priority is “the safety and security of Arkansans,” and that she will continue to work with lawmakers “to fight Communist China and protect the rights of all Arkansans.”
An Oct. 13 New York Times report quoted King and showcased Microsoft’s worries about crypto mining in Cheyenne, Wyoming, next door to a Microsoft data center supporting the Pentagon, and about a mile from an Air Force base controlling intercontinental ballistic missiles.
King promises to tackle the issue head-on. In a text message, he said that since Act 851 took effect, lawmakers have learned more about “concerns that should have been discussed.”
He said that House Bill 1799, which became Act 851, was filed late in this year’s regular session and improperly expedited. The bill’s title was deceptive, he said, seemingly just a clarification of regulations on digital asset mining. “However, it is just a guise for crypto mines to build in Arkansas and seemingly promote economic growth,” he said.
“Crypto-mining facilities draw immense energy and strain our electrical grids,” he said, adding that China banned bitcoin mining in 2021, ostensibly over energy use and financial concerns.
He fears crypto-mining centers threaten critical U.S. systems, including computer networks and a vulnerable electrical grid.
Worries over Chinese ownership thwarted plans for bitcoin sites in Harrison, Vilonia and elsewhere this summer, and the Times article named Arkansas among 12 states with Chinese-owned bitcoin mines collectively using enough electricity to power 1.5 million homes.
In July, Arkansas Business reported on one bitcoin mine near Greenbrier — despised by its neighbors for being noisy and arriving with no notice — tied to Gang Hu (or Hu Gang), leader of Greenland Holdings of Shanghai, which is nearly half-owned by the communist Chinese government.
Pushback by residents stopped a Greenland-related project in Harrison whose spokesman was Ethan Wang, the point man for the mine near Greenbrier. Wang’s business card, obtained by Arkansas Business, calls him business development director for MetaHash. Metahash Global is a Greenland Holding Group subsidiary related to Green Digital, the company behind the rejected Harrison project; Newrays LLC, which has the site near Greenbrier; and ViLoAr LLC, which pushed the Vilonia project. Bitcoin hub owners in Arkansas tend to be individually named LLCs, but shared ownership is common.
Opposition to bitcoin mines unites conservative technology hawks, liberal environmentalists and everyday Arkansans protecting their tranquility.
Graves, the Rice Growers Association chair, told KATV that he represents Arkansas County farmers concerned about their electricity and water. Local opponents also fear for the prairie’s duck hunting-related businesses.
Companies have been drawn to Arkansas because of its inexpensive land, a lack of zoning in unincorporated areas and a good deal on bulk power from Entergy Arkansas, the state’s largest electric utility.
Entergy offers a special tariff for the miners with a low energy charge: about three-quarters of a penny to a little over a penny per kilowatt-hour, as opposed to 10 or 11 cents for residential power, but that is just part of the rate. Demand charges typically make up a third or more of commercial power bills, and big customers also pay riders for energy cost recovery, energy efficiency, etc., a spokeswoman said. Entergy also requires a three-month deposit from miners, along with a surety bond or irrevocable letter of credit.
Little Rock attorney Lyle D. Foster owns several hundred acres in Arkansas County, most leased to “individuals, farmers, hunters” and commercial interests. He told Arkansas Business in an email Tuesday that when he bought the property in 2018, he “didn’t even know what crypto mining was.”
“One acre of that land is leased to Jones Digital, LLC, which is based out of Delaware,” Foster wrote. “My understanding is that it plans to use the site as a crypto mine and my lease requires employees and other service providers to come from Arkansas County and for prompt payment of all state and local taxes that will come about from operations.”
He said he is unaware of any Chinese or foreign ownership.
Belvia Rodgers, who helped arrange the meeting of concerned citizens Tuesday at the DeWitt Community Center, said she invited King to attend, and was seeking TV news coverage.
“We have one crypto farm that has recently been built,” Rodgers said. “It’s a black-and-white issue. We are opposed.”
Rodgers said her group has heard that six crypto-currency facilities are planned in the area. “I don’t know if that’s true or not, but I don’t think there’s anything good about it.”
DeWitt business owner Jackie Johnson, speaking just before the Arkansas County Quorum Court strengthened county noise restrictions this month, said she feared that if bitcoin mines keep proliferating, Arkansas “will no longer be the Natural State; we will be the Bitcoin State.”
She said that not too long ago, Arkansas had no bitcoin farms.
“It’s Sarah Huckabee Sanders and our Legislature [who] welcomed them [with] open arms. It’s something else too. Bitcoin miners are not little mom-and-pop businesses. They are big conglomerates that don’t even live in the United States,” Johnson said.