On November 25, a federal judge in Little Rock, Arkansas, took a significant step in favor of the cryptocurrency mining industry by issuing a temporary restraining order (TRO) that prevents state officials from shutting down a local operation owned by a U.S. citizen of Chinese descent.
Background on the Case
The TRO was granted by Chief U.S. District Judge Kristine Baker in favor of Jones Eagle, a cryptocurrency mining firm owned by Qimin “Jimmy” Chen. The legal battle involves two controversial state laws: Act 636 of 2023 and Act 174 of 2024.
Act 636 specifically prohibits any individuals or companies linked to the Chinese government from owning property in Arkansas, while Act 174 bans foreign entities from owning digital asset mining operations in the state.
State’s Allegations Against Chen
The state government argues that Chen, who holds majority ownership of Jones Eagle through Eagle Asset Holding, is a Chinese national. As a result, they are advocating for a permanent closure of his mining operation.
In response, Chen, a naturalized U.S. citizen living in New York, contends that the state’s move is discriminatory and based solely on his national origin. He took legal action by filing for the TRO, seeking to halt the enforcement of the aforementioned state laws against him.
Judicial Intervention and Next Steps
Judge Baker’s ruling temporarily suspends the state’s efforts for a period of 14 days. During this timeframe, a hearing will be held to assess whether the temporary restraining order should be transformed into a preliminary injunction, thereby providing ongoing protection against state intervention in Chen’s mining operations.
Legal Team’s Response
Chen’s attorney, Alex Jones, expressed relief and optimism regarding the ruling, stating that it safeguards Chen’s interests while they build a case arguing that the state laws in question are unconstitutional and represent an excessive overreach into legislative authority.
Furthermore, the legal documentation submitted by Chen illustrates his attempts to adhere to state regulations. He has reportedly provided information to the Arkansas attorney general to demonstrate that his mining operation is not located on agricultural land, a core stipulation of state law.
Challenges with State Communication
In his endeavor to clarify his citizenship status and regulatory compliance, Chen has faced hurdles with state officials, including a blocked meeting request. Arkansas Attorney General Tim Griffin commented, “I have been investigating a number of crypto mining operations and simply seeking the facts, but not all entities have cooperated fully.”
New Regulations for Bitcoin Miners in Texas
Meanwhile, in Texas, the Public Utilities Commission (PUCT) has introduced new regulations that require Bitcoin miners connected to the Energy Reliability Council of Texas (ERCOT) grid to register and submit crucial operational information to the state.
This rule mandates that miners disclose their facility locations, ownership details, and electricity demand to the state agency within one working day of connecting to the ERCOT grid. Moreover, miners are required to renew their registration annually by March 1, with non-compliance potentially resulting in severe penalties, classified as Class A violations that carry fines of up to $25,000 per day.
Texas as a Cryptocurrency Hub
The regulation comes at a time when Texas aims to solidify its position as a frontrunner in cryptocurrency innovation. Senator Ted Cruz, an outspoken advocate for Bitcoin, has expressed his commitment to making Texas a welcoming environment for cryptocurrency enterprises, stating in a recent interview, “I want Texas to be the oasis for Bitcoin and cryptocurrency. We’re seeing miners and innovators from around the globe invest here and create new jobs.”