Can an Arkansas city or county ban cryptocurrency or digital asset mining operations within its borders?
Plain-English summary
Representative Rick McClure asked whether cities and counties in Arkansas can stop digital asset mining (cryptocurrency mining) before it gets started in their jurisdictions, and whether they can enforce existing sound rules against mines that are already operating.
The AG's answers turn on the Arkansas Data Centers Act of 2023 (A.C.A. §§ 14-1-601 to 14-1-605), which the General Assembly passed to protect a growing industry it believes will benefit the state. The act limits what local governments can do.
Question 1: Can a city or county ban a new mine via ordinance? No. Cities and counties have only the authority granted by the constitution or statute (Protect Fayetteville v. City of Fayetteville; Gravett v. Villines). Local ordinances that conflict with state law are void (Ark. Const. amend. 55 § 1(a); A.C.A. §§ 14-14-801(a), 14-14-805(13)).
A.C.A. § 14-1-604(a) is a substantive grant of protection to digital asset mining businesses. A local ordinance that bans the activity entirely conflicts with this grant and is invalid. Local governments retain three regulatory levers but each is constrained:
- Operations and safety (A.C.A. § 14-1-604(a)(2)). Miners must follow local ordinances on operations and safety, so localities can write those ordinances. But the rules cannot be a stealth ban.
- Sound pollution (A.C.A. § 14-1-605(a)(1)). Localities can enforce sound-pollution rules in place before the act and can enact general sound-pollution limits.
- Equal treatment with data centers (A.C.A. § 14-1-605(a)(2)). Whatever local regulations apply to digital asset mining must apply equally to data centers. A city cannot, for example, impose noise limits only on mines while exempting traditional data centers.
So the act's preemption is asymmetric: total bans are out, but evenly applied operational and noise rules are fine.
Question 2: Can a city or county enforce existing sound limits against operating mines? Yes. The act explicitly preserves both existing local sound-pollution regulations (those in place before the act took effect) and the locality's authority to enact new general sound-pollution limits.
The AG declined to opine on whether any specific local ordinance complies with the act, since interpreting individual ordinances is outside AG opinion practice (Op. 2023-057, Op. 2019-067, Op. 2004-173, Op. 98-160).
What this means for you
City council and county quorum court members
Stop drafting ordinances that single out cryptocurrency mining for prohibition. Those will be void under § 14-1-604.
You can write ordinances that:
- Set operational and safety standards (zoning compliance, electrical safety, building permits, fire suppression, emergency egress).
- Set general sound-pollution limits (decibel caps at the property line, hours of operation tied to noise levels).
- Treat data centers and digital asset mining identically.
What you cannot do:
- Single out digital asset miners for stricter standards than data centers.
- Use zoning categories that effectively exclude mining everywhere in your jurisdiction.
- Pre-emptively ban mines through a moratorium that has no end date.
If you want a temporary moratorium while you study the issue, scope it narrowly: a stated time limit, an explanation of the study being conducted, and equivalent treatment of data centers.
City attorneys
Audit any existing or proposed ordinances about digital asset mining. The act's three rules (no ban, generally applicable noise OK, equal treatment with data centers) are bright-line. Litigation risk is high for ordinances that look like bans dressed up as zoning.
The pending Jones Digital LLC v. Ark. Cty. case (E.D. Ark. No. 2:2023cv00220, filed Nov. 1, 2023) was the trigger for the AG's decision in Op. 2023-068 to decline opining on related questions. Track that litigation; it may shape how the act's edge cases get resolved.
Cryptocurrency miners and the digital asset industry
The act gives you significant statutory protection: cities and counties cannot ban your activity. But you must comply with operational and safety rules and with general sound-pollution limits. The smart practice is to engage early with local government on noise mitigation: pick sites, soundwalls, and operating hours that are consistent with surrounding land uses.
Equal treatment with data centers is your best argument when faced with discriminatory local treatment. If a city imposes a noise rule that does not apply to data centers, you can challenge it under § 14-1-605(a)(2).
Residents near operating or proposed mines
The act limits but does not eliminate local control. Your city or county can:
- Enforce general noise rules at the property line.
- Adopt new general noise rules going forward.
- Apply standard zoning, fire code, and safety rules as long as those rules are uniform.
You cannot get a local ban on mining; that is preempted. But you can press your local government to adopt and enforce noise standards that are equally tough on data centers.
Data center operators
Watch for new local rules on operational standards or noise. Anything a city imposes on digital asset mining must apply equally to you. So new mining rules can become new operating constraints for you.
Common questions
What is digital asset mining?
The use of computing equipment to validate transactions on a public blockchain (such as Bitcoin) and earn cryptocurrency rewards. The activity is computationally intensive and uses a lot of electricity. Equipment generates heat that must be cooled, and the cooling fans plus the equipment create persistent noise.
Why did Arkansas pass the Data Centers Act?
The General Assembly stated in § 14-1-602(b)(1) that data centers create jobs, pay taxes, and provide general economic value to local communities and the state. The act was meant to shield the industry from local prohibition.
Are residential neighborhoods protected from mines?
Indirectly. A city can adopt zoning rules that distinguish residential from industrial uses, and a mining facility would need to be sited in an appropriate zoning district. The mining operation also has to comply with general sound-pollution rules at property lines.
Can a city require a special-use permit for a mine?
Probably yes if data centers face the same special-use permit requirement. Watch the equal-treatment rule.
What if my city already has a mine and noise is a problem?
A.C.A. § 14-1-605(a)(1) explicitly preserves your city's authority to enforce sound-pollution rules. The mine is required to operate within those limits.
What about electric utility impact?
A.C.A. § 14-1-604 says digital asset miners must operate "in a manner that causes no stress on a public electric utility's generation capabilities or transmission network." Op. 2023-068 declined to opine on what counts as "transmission network" because of pending litigation. Utility-side regulation may also apply.
Can a city impose a flat-out moratorium on mines?
Likely no. A moratorium with no end date functions as a ban. A short, defined moratorium tied to genuine planning or study work might survive, but the equal-treatment rule still applies (the moratorium would have to cover data centers too).
Background and statutory framework
A.C.A. §§ 14-1-601 to 14-1-605 (Arkansas Data Centers Act of 2023). Provides statewide regulation of digital asset mining, with significant preemption of local authority.
A.C.A. § 14-1-604. Identifies what miners must comply with: state business and tax laws, local operations and safety ordinances, utility rules, federal and state employment law. By specifying these as the applicable rules, it implicitly excludes blanket local bans.
A.C.A. § 14-1-605(a)(1). Preserves local sound-pollution regulations in place before the act and authorizes generally applicable sound-pollution limits.
A.C.A. § 14-1-605(a)(2). Equal-treatment rule: any regulation of digital asset mining must apply equally to data centers.
Ark. Const. amend. 55 § 1(a) and A.C.A. §§ 14-14-801(a), 14-14-805(13). General principle that county legislative authority is bounded by state law and that ordinances contrary to state law are void.
Protect Fayetteville v. City of Fayetteville, 2019 Ark. 30, 565 S.W.3d 477; Gravett v. Villines, 314 Ark. 320 (1993). Cities and counties have only the legislative authority granted by constitution or statute.
Citations
- A.C.A. §§ 14-1-601 through 14-1-605 (Data Centers Act of 2023)
- A.C.A. §§ 14-14-801(a), 14-14-805(13) (county legislative authority)
- Ark. Const. art. 12, § 4; amend. 55, § 1(a)
- Protect Fayetteville v. City of Fayetteville, 2019 Ark. 30, 565 S.W.3d 477
- Gravett v. Villines, 314 Ark. 320, 862 S.W.2d 260 (1993)
- Ark. Att'y Gen. Op. 98-160, 2004-173, 2019-067, 2023-057
Source
Original opinion text
Opinion No. 2023-060
November 16, 2023
The Honorable Rick McClure
State Representative
2424 Sulphur Springs Road
Malvern, Arkansas 72104
Dear Representative McClure:
You have requested my opinion regarding the Arkansas Data Centers Act of 2023 and local control of digital asset mining. With this legislation, the General Assembly stated that it intended to protect a growing industry that it believes will provide economic benefit to the entire state. But that protection limited local regulation of digital asset mining. You have asked two questions.
Question 1: If a city or county does not have a digital asset mining operation functioning in their city or county, can they prevent permitting or building [of a digital asset mining operation] through ordinance?
No, a city or county cannot prevent a new digital asset mining operation through an ordinance that bans digital asset mining. Because cities and counties have only the power given to them by the Constitution or statute, local ordinances that conflict with state law are invalid. With A.C.A. § 14-1-604(a), the General Assembly enacted protections for digital asset mining businesses, and local governments cannot ban them entirely. But digital asset miners still have to follow local ordinances concerning operations and safety and general sound pollution limits. Even so, local governments cannot regulate digital asset mining businesses differently than data centers. Thus, any ordinance for digital asset mining operations must also apply to data center operations.
Question 2: Is a city or county prohibited from enforcing existing sound and/or noise guidelines if digital asset mining is currently operational in their jurisdiction?
No, under A.C.A. § 14-1-605(a)(1), the Arkansas Data Centers Act expressly allows local governments to (1) enforce sound pollution regulations in place before the Act went into effect and (2) enact and enforce "limits set for sound pollution generally."
The question whether any particular local ordinance complies with the Arkansas Data Centers Act or other law is beyond the scope of this opinion. The answer to such a question would require one to interpret the ordinance. But it has long been the policy of the Office of the Attorney General to decline to interpret local ordinances when rendering official opinions.
Assistant Attorney General Jodie Keener prepared this opinion, which I hereby approve.
Sincerely,
TIM GRIFFIN
Attorney General