Bitcoin mining company NewRays has filed a lawsuit against Arkansas County Judge Allen Dodson and prosecuting attorney Phil Murphy, accusing them of selectively enforcing noise regulations against its crypto mining operations. The lawsuit, filed on Sept. 26, claims that the enforcement of newly enacted local laws unfairly targets the firm’s business while benefiting a civil lawsuit filed by local residents.
NewRays, which purchased property in Faulkner County in October 2022 to operate a data center for Bitcoin mining, claims that at the time of acquisition, there were no relevant zoning restrictions in place. However, after receiving noise complaints from nearby residents, local authorities introduced new laws, including decibel limits and criminal sanctions for violations.
The mining company argues that these local regulations, codified in “Ordinance 23-20,” were designed specifically to discriminate against crypto mining operations. NewRays claims the ordinance violates the Arkansas Data Centers Act, passed in April 2023, which protects large data centers and mining firms from discriminatory regulations. According to the complaint, despite other businesses in the area generating more noise, the ordinance appears to be selectively enforced only against NewRays.
The lawsuit alleges that Dodson, Murphy, and other officials coordinated enforcement of the ordinance, potentially to influence an ongoing civil lawsuit filed by residents against NewRays. Legal complications arose when NewRays attempted to move the civil case to federal court, but the county district court retained jurisdiction.
Justin Daniels, a partner at Baker Donelson, explained that targeting crypto companies with regulations is not uncommon, largely due to Bitcoin’s reputation for consuming large amounts of energy. He contrasted this with the lack of similar criticism against data centers used for artificial intelligence, which also require significant energy resources.
NewRays is seeking both preliminary and permanent injunctive relief to prevent enforcement of the ordinance.