Decrypting “Crypto” in Arkansas’s Regulatory Landscape

Over the past decade, cryptomining—born of exponential advances in computing power and the market’s demand for a secure, decentralized currency—rapidly evolved from a niche Silicon Valley venture into a global, capital-intensive industry disrupting energy markets, regulatory frameworks, and local economies alike. In Arkansas, the rise of digital asset mining has triggered a legislative whiplash: first a red-carpet welcome, then a regulatory crackdown. What began as an economic development play quickly evolved into a legal battlefield, pitting local governments against state law, private operators against political backlash, and constitutional rights against national security fears, some real, and some feigned.

This article unpacks how Arkansas went from inviting cryptominers to being opposite them in court, repealing laws it passed just a year earlier, and facing federal injunctions for overreach. As the legal framework continues to shift underfoot, one thing is clear: the regulation of cryptomining is no longer theoretical—it is being written in real time, in courtrooms across the state.

Blockchain, Cryptocurrencies, and Cryptomining

Despite its name, cryptomining does not involve digging into the Earth for precious metals. In fact, cryptomining does not involve “mining” at all. Instead, the term is shorthand for using computers with high processing capabilities to rapidly solve complex math problems for the purpose of facilitating transactions involving digital currencies within a “blockchain” environment.

At its core, blockchain is a distributed digital ledger—a secure, immutable database that records transactions across a decentralized network of computers. Unlike traditional ledgers maintained by a single institution (such as a bank), blockchain systems are peer-to-peer, meaning no central authority controls the data. Each transaction is grouped into a “block,” and each new block is cryptographically linked to the one before it, forming a transparent and tamper-resistant “chain” of records.

Blockchain’s architecture serves as the technological backbone of cryptocurrencies like Bitcoin. Cryptocurrencies are digital tokens that use blockchain to record ownership and validate transfers without requiring intermediaries. Proponents of digital assets argue that the decentralized nature of the blockchain eliminates the need for banks or governments to authenticate transactions—trust is instead built through mathematical consensus and network-wide verification.

Cryptomining plays a critical role in this process. Miners using advanced computers compete to solve complex mathematical puzzles that confirm and add new blocks of transactions to the blockchain. In return, the system rewards the first successful miner with newly issued cryptocurrency tokens. This incentive structure not only secures the network but also ensures the integrity and continuity of the blockchain itself. The Bitcoin network, for instance, boasts of more than 700 quintillion attempts to solve a blockchain puzzle every second.[1] This process is essential for maintaining the integrity and security of blockchain networks.

Without blockchain, there would be no cryptocurrency—and without miners, the blockchain would cease to function.[2] And with a single Bitcoin being worth around $100,000,[3] this new market has spurred global economic activity by both individuals and large companies who seek to diversify their portfolios with digital currencies.

Arkansas: Land of Opportunity, or Land of Injunctions

Recognizing the potential for economic growth, the State of Arkansas—once known as the “Land of Opportunity”—initially embraced cryptomining when it passed the Data Centers Act of 2023. The honeymoon quickly ended, however, when local communities pushed back (largely without evidence) against the perceived externalities of industrial—

scale mining: noise concerns, opaque ownership structures, and admittedly high energy consumption rates. Counties began enacting ordinances designed to curb or outright block cryptomining operations, prompting a wave of litigation that turned Arkansas from a regulatory safe haven into a constitutional battleground.

What followed was a series of legislative about-faces, judicial interventions, and federal injunctions—culminating in courts halting enforcement of the very laws that had been passed to tighten oversight. In less than two years, Arkansas managed to go from actively recruiting miners to defending the legality of its restrictions in federal courtrooms.

Act 851: The Arkansas Data Centers Act of 2023

The red-carpet embrace of cryptomining in Arkansas began in April 2023, when the General Assembly passed Act 851.[4] This legislation aimed to foster economic growth by attracting mining businesses to the state and recognized the industry’s potential to create jobs and tax revenue to local economies.[5] While Act 851 addressed several different aspects of the cryptomining industry, a key feature of this legislation preempted local cities and counties from passing discriminatory ordinances or imposing discriminatory policies against digital asset mining businesses.[6]

Despite Act 851’s provisions, in July 2023, the Arkansas County Quorum Court enacted a local ordinance that sound restrictions and notice requirements on cryptomining operators within the county. At that time, Jones Digital was constructing a data center, and while the local ordinance was likely preempted by Act 851, the operator chose to comply rather than litigate, and it continued forward with construction of its facility.[7]

Dissatisfied with Jones Digital’s compliance, in October 2023—70 days after Act 851 became effective—the Arkansas County Quorum Court passed a new ordinance that specifically targeted Jones Digital’s operations. The new ordinance sought to impose impossible burdens and impractical requirements on Jones Digital—for instance, although the general ambient noise around its facility (located near a highway) routinely exceeded 45 dba before its operations began, the new ordinance restricted sound decibel levels to 45 dba at night for cryptomining operators.[8] Compliance was factually impossible given the noise caused by the adjacent highway. Additionally, the new ordinance would have required operators to provide notice of their operations to an undefined class of individuals—“all hunters that utilize the area for hunting in a ten (10) mile radius.”[9] Ignoring for a moment that there is no list of individuals who hunt within a 10-mile radius of anywhere in Arkansas, hunters from all over the world travel to Arkansas to enjoy its natural resources. This was another impossible compliance artifice created to effectively outlaw cryptomining in Arkansas County.

Again attempting to avoid litigation, Jones Digital argued to the Quorum Court that these restrictions would make compliance impossible.[10] But the ordinance remained unchanged, and Jones Digital was compelled to file suit to enjoin the ordinance’s application pursuant to Act 851.[11] The Court granted Jones Digital’s request for a Temporary Restraining Order and Preliminary Injunction, stuck down the October ordinance, and enjoined Arkansas County officials from any further discrimination against Jones Digital’s operations.[12] On May 1, 2024, the Court entered an Amended Consent Decree that resolved the lawsuit among the Parties.[13]

Subsequent Legislative Amendments to Act 851

The resolution of Jones Digital’s case with Arkansas County galvanized industry opponents. Public outcry was substantial, and local governments argued that Act 851’s preemption clause unfairly limited local governments from regulating these facilities,[14] especially with respect to noise and related environmental matters.

Confronted with mounting pressure from local constituents with largely unsupported fears of cryptomining, the General Assembly delivered an about face during the 2024 legislative fiscal session and effectively repealed Act 851 with two amendments. First, cryptomining facilities were required to implement noise-reduction techniques and obtain state permits for operation.[15] Second, the General Assembly restored some regulatory powers to local governments, enabling them to address community-specific issues related to mining operations.[16] These amendments passed with supermajority votes in each chamber.

Foreign Ownership Controversies and Cryptomining

During the 2023 legislative session, the Arkansas General Assembly also enacted Act 636, a law aimed at restricting certain foreign entities from owning agricultural land in the state. Although Act 636 was not drafted with cryptomining in mind, it has had a significant impact on the industry. Cryptomining operators were initially drawn to Arkansas because of its vast tracts of inexpensive agricultural land, their proximity to electric substations, and otherwise relatively low barriers to entry. As a result, Act 636 inadvertently created regulatory headwinds for operators who had invested heavily in such properties.

The legal landscape grew even more complex during the 2024 fiscal session, when the legislature passed Acts 173 and 174, which explicitly prohibited individuals and entities from certain countries—including China—from owning or operating cryptomining businesses in Arkansas. While framed as national security measures, these laws sparked immediate constitutional challenges.

Notably, Jones Eagle LLC, a cryptomining company owned and operated by a naturalized U.S. citizen, brought suit to enjoin enforcement of the new laws. In December 2024, a federal judge granted Jones Eagle’s request for a temporary restraining order, blocking the State from enforcing the foreign ownership provisions. The Court expressed concern that the laws may violate various constitutional protections, and that case is currently on appeal before the Eighth Circuit.

As courts continue to grapple with these issues, the future of foreign investment in Arkansas’s cryptomining industry remains uncertain.

Ongoing Regulatory Developments

Pursuant to Acts 173 and 174, the Arkansas Oil and Gas Commission (“AOGC”) was tasked with promulgating rules aimed at regulating the State’s digital asset mining industry. After a public comment period and approval by the Legislature’s Administrative Rule Review Subcommittee, the AOGC adopted Rule K, which became effective on February 23, 2025.[17]

Under Rule K, existing operators were required to apply for a permit within ninety (90) days after the Rule became effective, and new facilities would be required to apply and receive a permit prior to commencing operations of a “Digital Asset Mining” facility.[18] This Rule also invests AOGC with the jurisdiction and authority to investigate complaints and assess penalties for noncompliance.[19] Among many requirements to obtain a permit, an operator must prove that it complies with Arkansas’s new industry laws and also submit schematics and engineering specifications establishing that the facility was constructed in accordance with the State’s noise reduction requirements.[20]

Notably, however, on April 30, 2025, Chief U.S. District Judge Kristine G. Baker issued a preliminary injunction halting enforcement of both Act 174 and Rule K.[21] The ruling stems from a lawsuit filed by the Arkansas Cryptomining Association on behalf of its members, including Jones Eagle LLC and NewRays One LLC, who allege the new regulations are unconstitutional. The Court confirmed that the Association has standing to sue and that it satisfied its burden of establishing a likelihood of success on the merits of its federal preemption claim, concluding that enforcement of the foreign ownership provisions in the Act and Rule K is “ipso facto” unconstitutional.[22]

This marks the second time a federal judge has barred enforcement of Act 174. The latest injunction prevents state officials, including the Arkansas Attorney General and the AOGC Director, from enforcing any part of Act 174 or Rule K, while the broader constitutional challenges proceed to a full trial on the merits. Attorneys for the Association argue the law discriminates based on perceived race and national origin and infringes on due process, equal protection, and interstate commerce rights. The Court has not yet ruled on those additional constitutional claims but signaled serious concerns over the State’s authority to regulate in a space arguably preempted by federal law.

Conclusion

Apprehension of new technologies is nothing new. From the printing press to the steam engine, and more recently the internet, each disruptive innovation has faced skepticism, resistance, and calls for prohibition. NIMBYism—“not in my backyard”—has long served as the frontline of this resistance, cloaking parochial self-interest in the language of public concern. What is new, however, is the speed at which that apprehension now metastasizes into legislation, litigation, and regulatory overreach—often before the underlying technology is even fully understood by policymakers or the public.

In the case of cryptomining, amorphous fears about energy usage, foreign ownership, and noise have led to sweeping restrictions untethered from actual evidence. Rather than engaging in deliberate, data-driven policymaking, many jurisdictions have opted for reflexive exclusion. And in doing so, they risk driving away the very innovation they once sought to attract and could benefit from. Arkansas’s experience with cryptomining to-date illustrates this point well.

What began as a legislative embrace of cryptomining in Arkansas has quickly morphed into a high-stakes clash of constitutional proportions—all playing out in real time. In just two years, the Arkansas has passed, repealed, amended (and the same enjoined) a series of laws that alternately welcomed, restricted, and now likely overreached constitutional guardrails—at least according to two federal court rulings. For industry participants, the message is clear: the legal and regulatory ground beneath Arkansas’s cryptomining sector is shifting—and fast. Whether you are a startup exploring opportunities, a multinational investor navigating foreign ownership restrictions, or a local government seeking clarity on your regulatory authority, success in this space now depends as much on legal compliance as it does on computing power.

The attorneys at Hall Booth Smith, P.C. are actively advising clients across the digital asset, energy, and infrastructure sectors. If your organization is facing compliance challenges or regulatory uncertainty in Arkansas or beyond, contact us to ensure your operation is built on a legally sound foundation—not one waiting to be mined for liabilities.

[1] https://research.grayscale.com/reports/the-power-of-bitcoin-mining#_ftn1

[2] https://www.britannica.com/money/what-is-crypto-mining

[3] https://www.binance.com/en/price/bitcoin

[4] https://arkleg.state.ar.us/Home/FTPDocument?path=/ACTS/2023R/Public/ACT851.pdf

[5] Ark. Code Ann. § 14-1-502 (b)(1)-(2).

[6] Ark. Code Ann. § 14-1-505.

[7] Jones Digital, LLC vs. Arkansas County, et al., 2:23-cv-220, Doc 1. at 48. 

[8] Id., Doc 1. at 55.

[9] Id., Doc 1. at 60.

[10] Id., Doc 1. at 54.

[11] Id., Doc 1. at 80.

[12] Id., at Doc. 26.

[13] Id., at Doc. 69.

[14] https://katv.com/news/local/natural-state-or-bitcoin-state-rural-arkansas-county-fights-introduction-of-crypto-mine-quorum-court-dewitt-tim-blair-prosecuting-attorney-noise-ordinance-act-851-cryptomining-cryptocurrency-tami-hornbeck-jones-digital-computing-kenneth-graves-governor

[15] Act 173 at https://arkleg.state.ar.us/Acts/FTPDocument?path=%2FACTS%2F2024F%2FPublic%2F&file=173.pdf&ddBienniumSession=2023%2F2024F; Act 174, at https://arkleg.state.ar.us/Acts/FTPDocument?path=%2FACTS%2F2024F%2FPublic%2F&file=174.pdf&ddBienniumSession=2023%2F2024F

[16] Id.

[17] Rule K, Arkansas Oil and Gas Commission, at https://www.aogc.state.ar.us/DigitalAssets/rule_k.pdf

[18] Id.

[19] Act 174 at, https://arkleg.state.ar.us/Acts/FTPDocument?path=%2FACTS%2F2024F%2FPublic%2F&file=174.pdf&ddBienniumSession=2023%2F2024F

[20] Id.

[21] Arkansas Cryptomining Association v. York et al, Case No. 4:25-cv-00234. at Doc. 33.

[22] Id.

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