A Bitcoin mining firm, NewRays, has filed a lawsuit accusing an Arkansas County judge and prosecutor of unfairly using local noise laws to target its business. The company claims selective enforcement of new regulations has hindered its operations.
Allegations of Targeted Enforcement
In a complaint submitted to the Arkansas district court on September 26, NewRays accuses Judge Allen Dodson and prosecutor Phil Murphy of enforcing noise ordinances aimed specifically at its crypto mining center. The firm began operating its facility in Faulkner County in October 2022, before any noise restrictions existed.
However, after residents voiced concerns, the county enacted laws limiting noise levels and introducing criminal penalties for violations. NewRays argues that this ordinance unfairly targets its operations and violates the Arkansas Data Centers Act of April 2023, a law designed to protect large-scale computing operations from discriminatory local regulations.
Legal and Zoning Challenges
The lawsuit claims that the noise ordinance, identified as “Ordinance 23-20,” was crafted to single out NewRays, even though other businesses in the area produce more noise. According to NewRays, these actions may have been coordinated to support a separate civil lawsuit filed by residents.
The situation grew more complicated when NewRays sought to move the civil case to federal court, but the county court retained jurisdiction, making it harder for the company to escape local legal challenges.
Broader Issues in Crypto Regulation
NewRays’ legal representatives argue that crypto mining operations are often unfairly targeted, a sentiment echoed by Justin Daniels, a partner at Baker Donelson. Daniels noted that while Bitcoin mining is frequently criticized for its energy consumption, other high-energy industries, like AI data centers, don’t face the same backlash. He suggests this bias stems from a widespread belief that artificial intelligence holds more value than Bitcoin.
Despite the broader regulatory debate, Faulkner County had begun discussing noise restrictions specific to crypto mining, referred to as the “crypto mine ordinance,” as early as June 2023. NewRays believes this demonstrates an intentional effort to discriminate against the crypto industry.
NewRays Seeks Court Protection
In response to the situation, NewRays is seeking preliminary and permanent injunctive relief to prevent the county from enforcing the noise ordinance against its operations. The company argues that the ordinance not only unfairly targets its business but also conflicts with state laws meant to protect data centers.
