A U.S. District Judge has ruled that Faulkner County’s controversial noise ordinance targeting cryptocurrency mining operations will remain in force while a lawsuit against the county proceeds in federal court. The ruling follows a six-hour hearing to consider a preliminary injunction filed by North Carolina-based NewRays One LLC, which sought to block the enforcement of the ordinance.
Judge Lee Rudofsky, who presided over the hearing, denied the motion for an injunction on the grounds that NewRays One LLC was unlikely to succeed on any of its six claims if the case were to proceed to trial. The case centers around Faulkner County’s Ordinance 23-20, passed last year to regulate noise levels from crypto mines, which has sparked widespread debate over the growing impact of cryptocurrency mining on local communities.
Crypto Mining and Noise Complaints: A Growing Tension
NewRays One LLC, a digital asset mining company, purchased land in Faulkner County in October 2022 and began operations in May 2023. The company filed its lawsuit on September 26, arguing that Faulkner County’s ordinance, which limits noise levels to 60 decibels during the day and 55 decibels at night, violates state law.
In their complaint, NewRays pointed to the Arkansas Data Centers Act of 2023 (Act 851), which was passed by the state’s General Assembly to prevent local governments from imposing discriminatory regulations on crypto mining operations. The company claims the noise ordinance specifically targets their industry and thus violates state law.
However, residents near the data center have raised concerns about noise levels, which they say frequently exceed the limits set by the county, sometimes reaching over 70 decibels. In July 2023, a group of 23 residents filed a lawsuit in Faulkner County Circuit Court, later moved to federal court, alleging that the noise from the data center is a significant disturbance. That case is set for trial on September 30, 2025.
Judge Rudofsky’s Ruling: NewRays Unlikely to Prevail
During Friday’s hearing, attorneys for both sides suggested a temporary restraining order (TRO) as a compromise, which would have paused enforcement of the noise ordinance for two weeks while the court considered the preliminary injunction. However, Judge Rudofsky ruled that issuing a TRO would exceed his authority, and instead moved forward with considering the injunction.
In his ruling issued late Sunday, Rudofsky found that NewRays was unlikely to succeed on the merits of any of the six claims in its lawsuit, which include First Amendment retaliation, preemption, procedural due process, and equal protection.
The judge applied the “Dataphase test,” a four-factor analysis used in federal courts to determine whether a preliminary injunction should be granted. According to this test, a plaintiff must demonstrate that they are likely to succeed on the merits of their case, that they would suffer irreparable harm without an injunction, that the balance of equities tips in their favor, and that the injunction would serve the public interest.
Judge Rudofsky concluded that none of the claims met these standards, particularly when weighed against the public interest in enforcing the county’s ordinance.
Arkansas Lawmakers Revisit Crypto Mining Regulations
Crypto mining, which involves using powerful computers to solve complex mathematical equations and generate digital currencies, has become a contentious issue in Faulkner County and across Arkansas. The industry consumes significant energy and requires constant cooling of equipment, leading to noise pollution that has drawn the ire of residents living near mining facilities.
While the Arkansas Data Centers Act of 2023 initially prohibited local governments from enacting regulations specifically targeting crypto mining, lawmakers have since reconsidered their stance. During the state’s 2024 fiscal session, the legislature passed Act 173, which introduced new noise reduction requirements for digital asset mining operations. The law also prohibits foreign-owned entities from operating crypto mining businesses in Arkansas.
As the case continues, it remains to be seen how the conflict between local regulations and state laws protecting the crypto mining industry will be resolved.
Judge Rudofsky’s decision ensures that the noise ordinance will remain in effect while the lawsuit moves forward, with a full trial expected in September 2025.
