Bitcoin Mining Firm Sues Judge and Prosecutor for Targeting Crypto Firms with Noise Laws

Bitcoin mining company NewRays has sued an Arkansas County prosecutor and judge, claiming they are selectively initiating enforcement actions against crypto firms. 

NewRays filed the complaint in the Arkansas district court on September 26. The filing alleged that Prosecuting Attorney Phil Murphy, Judge Allen Dodson, and others are targeting the business in their noise legislation enforcement. 

NewRays Sues County Judge Over Noise Legislation Enforcement

In October 2022, NewRays purchased a property in Faulkner County, Arkansas, to run a data center for Bitcoin mining. At the time, no relevant zoning restrictions existed.

However, after several complaints from residents, the local authorities enacted some laws, imposing noise limits and penalties for violations. 

NewRays’ September 26 complaint alleged that the municipal ordinance conflicts with the Arkansas Data Centers Act of 2023. This legislation protects extensive data mining and computing operations from discriminatory regulations.

The firm asserts that the defendants deliberately enforced the ordinance to benefit a civil suit filed by some residents. 

The matter became complicated when NewRays requested to transfer the civil case to a federal court, but the county district court denied it, citing jurisdiction. 

Noise Legislation Solely Targets Crypto Mining Operations

Speaking to Law.com, Justin Daniels, a Baker Donelson partner, said targeting crypto firms is common because Bitcoin has been criticized for its voracious energy consumption.

Daniels noted that data training centers for AI run a similar magnitude of operations, yet they are still waiting for someone to come after them. According to the lawyer, this is due to the general notion that AI has more value than Bitcoin. 

The county started mulling over a crypto-mining ordinance in June 2023. According to NewRays’ complaint, this ordinance aimed to discriminate against crypto mining operations and data centers. 

The suit further alleged that “Ordinance 23-20” was designed to apply solely to NewRays even though other businesses generate more noise. 

The mining company demands preliminary and permanent injunctive relief to restrain the defendants from enforcing the ordinance. 

Bitcoin Mining and AI Data Centres

Cryptocurrency mining has faced significant criticism due to Bitcoin’s large energy consumption. This has led to moratoriums to stop Bitcoin mining in New York and ban threats in Europe. 

However, a recent report from the Bitcoin Policy Institute (BPI) suggests that AI may consume even more power than Bitcoin. 

While this may seem good for Bitcoin mining as it could divert critics’ attention to AI, the BPI thinks it poses a threat. According to the report, AI companies are heavily financed and can outbid Bitcoin miners for electricity. 

Since AI offers around 25 times more revenue per Kilowatt hour than Bitcoin, some miners have started diversifying to the field. Bitcoin miner Hive Digital recently expanded its operation to include AI data centers. 

In 2022, the firm invested $66 million to purchase Nvidia graphic processing units. The company is now channeling these GPUs to power AI workloads. According to Aidan Killick, the company’s president, Hive’s AI venture has already generated higher revenue than its crypto mining operations.

BPI believes this trend will continue for as long as AI generates more revenue per megawatt hour than Bitcoin.