Bitcoin Miners Will Have Same Rights as Data Centers, Says New Arkansas Bill

A new bill aimed at regulating Bitcoin mining in Arkansas has been approved by both the House of Representatives and Senate and is now awaiting Governor Sarah Huckabee Sanders’ signature.

The Arkansas Data Centers Act of 2023 seeks to establish guidelines for Bitcoin miners and protect them from discriminatory regulations and taxes, guaranteeing that firms have the same rights as data centers.

Proposed on March 30 by Rep. Rick McClure and co-sponsored by Arkansas Senator Joshua Bryant (R), the bill quickly garnered support from state legislators.

The legislation acknowledges the economic value of data centers, recognizing that they "create jobs, pay taxes, and provide general economic value to local communities."

“Data centers, digital currency, and blockchain technology are legal in all fifty (50) states; and guidance for future industry growth is needed in Arkansas to protect Arkansans from fraudulent business practices,” reads the document.

While the bill mandates that crypto miners must pay applicable taxes and government fees using acceptable forms of currency and must operate in a way that does not strain the public electricity grid, it also specifies that the Arkansas government cannot impose unique requirements that are different from those imposed on data centers.

“Discrimination against digital asset mining business [is] prohibited,” states paragraph 14-1-505 of the bill.

“The state of Arkansas has pulled off a surprise victory and become the first in the nation to pass the ‘Right to Mine’ Bitcoin bill in both the House and Senate,” Satoshi Act Fund CEO and co-founder Dennis Porter commented on the news.

The proposed bill also defines certain terms related to digital asset mining. For instance, "digital asset mining business" refers to a collection of computers located at a single site that consumes over one megawatt (1MW) of power on average per year to generate digital assets through blockchain network security.

The legislation also seeks to protect individuals engaged in cryptocurrency mining from their homes, saying that “an individual may utilize a node in this state for the purpose of operating home digital asset mining at the individual's residence according to applicable utility rules and rates.”

The bill defines a "node" as a computational device that houses a copy of the blockchain-distributed ledger technology, while a "residence" is defined as a permanent dwelling place, unit, or accessory structure.

Furthermore, “a person that is engaged in home digital asset mining or that has a digital asset mining business shall not be considered a money transmitter under the Uniform Money Services Act,” reads the bill.

It’s quite a different picture in Texas, where legislators are seeking to remove incentives for Bitcoin miners through Bill 1751. Last week, the bill was unanimously approved in a state Senate committee vote; however, lobbying groups opposing the legislation still hope it doesn’t become a law.

As explained by Kristine Cranley, Director of Business Development at the Texas Blockchain Council, after being voted out of the Senate, the bill will proceed to the House and have to go through the same process there.

“It does not at this point have a co-sponsor in the House. Even if it does get heard on the house floor, time is short for bills to make it through the entire process before the legislature adjourns on May 29, so there are many places along the way where it can get stalled,” Cranley told Decrypt.

The Texas Blockchain Council is now focusing on contacting senators and asking them to register a “no” vote on the bill, and is urging others to reach out to their senators “to request that they support a level playing field for all industries by voting no on this discriminatory bill,” added Cranley.

A more significant decision was made by the State of New York in November 2022, when Governor Kathy Hochul approved the proof-of-work mining moratorium, which effectively prohibits cryptocurrency mining operations in the state for a period of two years.

Meanwhile, at the federal level, crypto miners may soon be liable for a 30% tax on their electricity expenses if President Biden's budget proposal, introduced on March 9, is enacted.