A Bitcoin mining company, NewRays, has initiated legal action against an Arkansas County judge and prosecutor, alleging selective enforcement of noise regulations aimed specifically at crypto firms. The complaint was filed on September 26 in the district court of Arkansas and targets Judge Allen Dodson, prosecuting attorney Phil Murphy, and other local officials.
NewRays purchased property in Faulkner County, Arkansas, in October 2022 with plans to operate a data center for crypto mining. At the time of acquisition, there were no zoning restrictions that would impede their operations. However, following complaints from local residents, the county enacted new laws imposing decibel limits and criminal penalties for violations.
According to the complaint, these ordinances infringe upon the Arkansas Data Centers Act, enacted in April 2023, which is designed to protect large computing and data mining operations from discriminatory local regulations. NewRays argues that the new noise legislation was introduced specifically to target its business in response to community complaints.
The lawsuit alleges that local officials coordinated efforts to enforce the new noise ordinance, suggesting a motive to benefit from a civil lawsuit filed by residents against NewRays. Legal challenges escalated when NewRays sought to move the civil case to federal court, but the county district court asserted jurisdiction over the matter.
Justin Daniels, a partner at Baker Donelson, noted that the targeted actions against crypto companies may stem from Bitcoin's controversial reputation regarding its energy consumption. He pointed out a double standard, suggesting that data training centers for artificial intelligence, which consume similar resources, do not face the same level of scrutiny.
The complaint further claims that discussions regarding a "crypto mine ordinance" had begun as early as June 2023, indicating a deliberate effort to impose regulations that would specifically disadvantage crypto mining operations. NewRays argues that "Ordinance 23-20" was created with the intent to apply exclusively to their business, even though other local enterprises generate more noise.
In its lawsuit, NewRays has requested both preliminary and permanent injunctive relief to prevent the enforcement of the ordinance by the defendants. The outcome of this case could set a significant precedent for how local governments regulate cryptocurrency operations and may affect future mining activities in the region.
As the legal battle unfolds, NewRays's lawsuit highlights the growing tensions between crypto firms and local regulations. If successful, it could pave the way for a more favorable legal landscape for cryptocurrency operations, challenging perceptions and regulatory frameworks that currently impede their growth. The case serves as a reminder of the complexities and challenges faced by the crypto industry amid evolving local and state-level regulations.
October 2024, Cryptoniteuae