Arkansas Digital Asset Mining Business Ownership Restrictions

Act 174 was enacted as part of Arkansas’ broader rewrite of the Arkansas Data Centers Act of 2023 and its new permitting framework for digital asset mining businesses. For ownership purposes, the key provision is § 14-1-606, titled “Ownership of digital asset mining business by prohibited foreign-party-controlled business prohibited — Definitions — Penalty — Reporting.” The act defines an “interest” as an ownership interest greater than zero percent and defines a prohibited foreign-party-controlled business as a digital asset mining business in which a prohibited foreign party owns an interest.

The restricted category of “prohibited foreign party” includes several groups tied to countries subject to § 126.1 of the International Traffic in Arms Regulations as of January 1, 2024, foreign governments formed in those countries, certain entities organized under those governments’ laws, parties with significant interest or substantial control tied to those persons or governments, entities of particular concern designated by the U.S. Department of State, and agents or fiduciaries of covered persons or entities.

Section 14-1-606 provides that a prohibited foreign party may not acquire or hold, by grant, purchase, devise, descent, or otherwise, any interest in a digital asset mining business in Arkansas. It also bars a person from acquiring or holding a digital asset mining business as an agent, trustee, or other fiduciary for a prohibited foreign-party-controlled business.

For covered businesses already operating before the effective date, Act 174 established a 365-day period for the prohibited foreign party to divest all interest in the digital asset mining business. The Attorney General may investigate suspected violations, including by receiving sworn statements and issuing subpoenas for witness testimony and records. If the Attorney General concludes that a violation occurred, the statute authorizes a divestment order and, after noncompliance, a circuit-court action.

Potential remedies include judicial foreclosure of the digital asset mining business, civil penalties up to $1 million or 25% of the fair market value of the prohibited foreign party’s interest, court costs, prejudgment and postjudgment interest, reasonable attorney’s fees, and treble damages if a court-ordered civil penalty is not paid. The statute also states that local approval, a state permit, or another authorization to operate is not a defense to an action under the ownership restriction.

Act 174 also created Arkansas Code Title 23, Chapter 119, which requires a digital asset mining business to operate with a valid permit from the Arkansas Oil and Gas Commission and directs the Commission to promulgate implementation rules. Those permitting provisions are legally distinct from the ownership restriction, but the same federal litigation has addressed Act 174 and Rule K together because the court concluded the challenged provisions were not severable at the preliminary-injunction stage.