In US Crypto Mining Regulation, Where do the States Stand?

Bills in Arkansas and Montana that focus on crypto mining have passed in recent days, while legislation in other states remain in the ratification process.

While some of the proposed or passed pieces of legislation seek to protect the rights of crypto miners, others seek to put certain restrictions on companies operating in the sector.

Where do the bills stand and what’s in them?

Of the 7 states examined below, most have legislation that is still working its through their political systems, while one, New York, has a crypto mining bill already signed into law.

Arkansas

The Arkansas Data Centers Act of 2023, passed by the state’s House and Senate last week, seeks to protect miners from discrimination.

The law prohibits a local government from imposing requirements for crypto miners that differ from those applicable to data centers, such as rezoning areas to unfairly target such businesses.

It also says the Arkansas Public Service Commission, which regulates the state’s utilities, is not allowed to establish “an unreasonably discriminatory rate” for crypto mining customers.

The act must be signed by Gov. Sarah Huckabee Sanders before it becomes law.

Montana

Montana’s House of Representatives passed a similar bill to Arkansas’s miner-friendly legislation on Wednesday.

It now heads to Gov. Greg Gianforte’s desk for final approval.

The bill allows industrial and at-home miners to conduct their business free from government interference, noting that crypto mining “provides positive economic value” for people and companies in the US.

Like the Arkansas law, Montana’s bill requires the government to treat crypto miners no different from data centers.

Missouri and Mississippi

Proposed laws in Missouri and Mississippi, like the bills in Arkansas and Montana, look to offer protection for crypto miners.

First proposed in January, the Missouri bill would similarly limit actions the state can take against such activities, such as prohibiting its Public Service Commission from setting discriminatory rates for a digital asset mining business.

It also looks to stop the state from prohibiting the running of nodes for crypto mining at private residences, according to a bill summary.

Mississippi’s proposed law brings up similar language to the Arkansas and Montana bills in that it would block the state from treating miners differently than data centers.

The Missouri bill was passed by the state’s House on March 7, but appears to have stalled.

The Mississippi bill passed the state Senate in February but failed to pass during a House of Representatives vote last month.

Texas

Texas Senate Bill 1751 would prohibit tax abatements on certain bitcoin mining property and set limits on miners’ participation in demand response programs.

The type of demand response the Texas bill would impact is ancillary services — where bitcoin miners, in this case, sell the right to the Electric Reliability Council of Texas (ERCOT) to curtail miner load as it sees fit to balance the grid.

Riot Platforms, a miner operating in the state, called the bill “misguided” and argued that it would lead to a more expensive and less reliable energy grid.

In a Wednesday letter to Lieutenant Governor Dan Patrick, leaders of the Chamber of Digital Commerce, the Texas Blockchain Council and the Satoshi Action Fund, wrote that the bill would have “devastating impacts on Texas’ leadership role in the digital economy and could have unintended consequences on the state’s energy security.”

Introduced last month, the Texas Senate voted to approve the bill on Wednesday. The bill now heads to the state’s House of Representatives.

Texas Blockchain Council President Lee Bratcher told Blockworks he believes Texas Senate Bill 1751 will “struggle to gain traction” in the House due to its “anti-competitive nature.”

Fred Thiel, CEO of crypto miner Marathon Digital, previously said he didn’t think the law would pass the House, noting he expects “sane heads will prevail.”

Analysts at Compass Point Research & Trading wrote in an April 10 research note that even if the proposal passes the Senate and House, they believe Texas Gov. Greg Abbott would veto it.

Oregon

An Oregon bill introduced in January would require facilities with high energy use, including those involved in crypto mining, to reduce greenhouse gas emissions.

Amazon had lobbied against the bill from the start of discussions, the Washington Post reported earlier this month, essentially killing it.

The tech giant “successfully nurtured fear that our energy requirements would drive away the development of data centers,” Oregon state Rep. Pam Marsh told the news outlet.

The bill would have set up specific emissions reduction targets in the years ahead — such as lowering emissions by 60% below their baseline current levels by 2027 — and required operators of such facilities to provide proof of compliance via annual reports to the Department of Environmental Quality.

Violations were to result in a $12,000 penalty per megawatt-hour in violation for each day not in compliance.

A public hearing related to the proposal was held on March 20. Those set to testify in support included leaders from Southern Oregon Climate Action Now and the NW Energy Coalition, while people from the Economic Development for Central Oregon and the Data Center Coalition were slated to speak in opposition of the measure.

New York

A crypto mining-related bill in New York is unique in that it is no longer pending.

The law, which paused crypto mining operations that use proof-of-work methods to validate blockchain transactions, was signed by Gov. Kathy Hochul last November.

The bill prevents the state from approving such operations that depend on carbon-based power for two years, noting that such crypto miners “impact compliance” with New York’s Climate Leadership and Community Protection Act.

Kristin Smith, executive director of Blockchain Association, had said before it was signed that the bill would have “a significant chilling effect on crypto mining in the state,” adding that it could send hundreds of jobs to other states.

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