MONTEVIDEO/PARIS, Aug 21 (Alliance News): Uruguay appeared to be an ideal location for cryptocurrency giant Tether to establish a major bitcoin mining operation, but the project ultimately collapsed after a dispute over electricity supplies, according to a Reuters review of documents and interviews with people familiar with the project.
Tether announced in 2023 that it planned to establish two bitcoin mining sites in Uruguay, describing the country as an attractive location because of its renewable energy resources, reliable electricity grid and political stability.
The company said the investment would contribute to economic development, energy infrastructure and employment.
Instead, the project was abandoned after Tether and Uruguay’s state-owned electricity utility UTE disagreed over the amount of electricity that could be supplied to the mining facilities.
The failed investment provides an unusual insight into Tether’s efforts to expand beyond cryptocurrency and invest its substantial profits in areas including energy production, bitcoin mining, technology and other industries.
Tether did not respond to Reuters requests for comment.
Uruguay seen as ‘perfect platform’
In May 2023, Tether announced that it was launching bitcoin mining operations in Uruguay.
The company described Uruguay as the “perfect platform” for its plans, citing the country’s abundant renewable energy and strong electricity infrastructure.
Tether said at the time that it intended to invest in energy production but did not disclose the size of the planned investment.
Bitcoin mining is an energy-intensive process in which powerful computers solve complex mathematical problems to verify transactions and maintain the cryptocurrency network. Miners receive bitcoin as a reward for providing the computing power.
Tether CEO Paolo Ardoino has previously said the company has invested more than $2 billion in energy production and bitcoin mining.
A former Tether contractor told Reuters that Uruguay was expected to serve as a first step for the company’s broader bitcoin mining ambitions in South America.
The contractor estimated that Tether invested about $60 million in each of two mining sites in Uruguay’s Florida department, putting the total investment at roughly $120 million.
The investment would have represented a significant amount for Uruguay, where annual foreign direct investment is around $2 billion.
The former contractor said the company viewed Uruguay as a testing ground before expanding its operations into larger markets such as Brazil, Paraguay and Argentina.
Tether has since announced investments related to bitcoin mining and digital platforms in Brazil.
Mining operation initially became operational
A promotional video published by Tether in February 2024 showed the company’s developing mining operation in Uruguay.
The footage showed rows of small buildings surrounded by farmland, with cooling fans installed above the structures and computing equipment inside. Wind turbines could also be seen in the background.
The company used cryptocurrency-related names for roads surrounding the facility, including “Memepool Avenue” and “Halving Street”.
Two former Tether contractors told Reuters that the operation initially functioned effectively and generated income.
However, the project later encountered a fundamental problem: access to electricity.
Dispute over electricity supply
The dispute involved Tether’s local entity, Microfin, and UTE, Uruguay’s state-owned electricity utility.
According to people familiar with the matter, Tether believed its electricity contract with UTE allowed the company to receive a minimum amount of electricity and increase its consumption later.
UTE, however, interpreted the agreement differently, viewing the contracted amount as the maximum electricity allocation.
Sources at UTE also said the disagreement concerned the amount of electricity Microfin was legally entitled to receive.
The dispute had emerged by November 2024, according to an internal UTE briefing prepared in 2025 and reviewed by Reuters.
The shortage of electricity became increasingly serious as demand from Tether’s mining facilities increased.
One former contractor said the facilities were sometimes left without adequate electricity for several days, making it difficult for the mining operation to function normally.
Neither Tether nor Microfin responded to requests for comment about the electricity contract.
Political change added pressure
The electricity dispute also unfolded during a change in Uruguay’s political leadership.
A left-leaning government took office in March 2025 and appointed new directors at UTE.
According to one former contractor, the new leadership adopted a tougher position toward Tether’s efforts to renegotiate the electricity agreement.
Two months after the new government took office, Microfin stopped paying its electricity bills, according to the UTE document.
The company subsequently informed UTE in June 2025 that it intended to terminate its electricity contracts.
Both sides later attempted to rescue the project by negotiating a revised agreement.
UTE’s board approved a memorandum of understanding and revised contract documents, according to the utility’s internal briefing.
However, Tether representatives did not attend the scheduled signing, according to minutes included in the briefing.
With the agreement unsigned and electricity bills unpaid, UTE disconnected power to the mining sites on July 25, the document showed.
The loss of electricity effectively brought the mining operation to an end.
Staff layoffs and closure
Tether later informed Uruguay’s labour authorities that it would cease operations and lay off most of its employees.
Local newspaper El Observador reported that the notification was made on November 25.
Microfin subsequently settled its outstanding electricity debts in December, UTE told Reuters.
The closure left little visible evidence of what had initially been presented as a significant investment in Uruguay’s emerging cryptocurrency and technology sector.
Why bitcoin mining is becoming more difficult
The collapse of Tether’s Uruguayan operation also highlights wider challenges facing the bitcoin mining industry.
Mining depends heavily on access to large amounts of inexpensive electricity.
Operators compete to secure cheap power because electricity represents one of the largest costs associated with running the highly specialised computers required to mine bitcoin.
The economics of the industry have become more challenging following bitcoin’s programmed “halving” in April 2024.
A halving reduces the number of bitcoins awarded to miners for processing transactions, putting pressure on companies with high operating costs.
Bitcoin’s price also fell sharply from its peak in 2025, further affecting mining profitability.
As a result, mining companies have increasingly looked for ways to reduce their expenses.
Some operators have invested in more energy-efficient hardware, while others have moved their operations to countries or regions where electricity is cheaper.
Another growing strategy has been to redirect computing infrastructure toward artificial intelligence and high-performance computing.
Tanay Ved, a senior research analyst at Talos, said bitcoin miners were increasingly exploring alternative uses for their computing capacity.
Uruguay may be better suited to AI data centres
Uruguay has several advantages for technology companies, including a reliable electricity grid and strong internet connectivity.
However, experts say those advantages do not necessarily make the country attractive for bitcoin mining because electricity costs remain relatively high.
Crypto mining expert Nicolas Ribeiro described the sector as highly mobile, with companies able to establish operations, shut them down and relocate their equipment relatively quickly.
He said Uruguay’s infrastructure could instead be more suitable for data centres supporting artificial intelligence and other high-performance computing applications.
“Uruguay isn’t viable for mining — that’s the reality,” Ribeiro said.
The experience illustrates one of the central challenges facing cryptocurrency mining: an operation can be established relatively quickly but can also become commercially unviable if electricity costs, supply conditions or cryptocurrency prices change.
Tether’s wider investment strategy
The failed Uruguay project is part of a much broader investment strategy by Tether.
The company is best known for issuing USDT, a stablecoin designed to maintain a value linked to the US dollar.
Tether says its stablecoin is backed by equivalent real-world assets. Those assets have helped make the company one of the major holders of US Treasury securities and generated billions of dollars in profits.
Tether has increasingly used those profits to build investments outside its core stablecoin business.
Its investments have included energy production, data centres, technology companies, a brain-chip implant business and a stake in Italian football club Juventus.
The company has also invested in Rumble, a video-sharing platform that hosts US President Donald Trump’s Truth Social content.
Tether controls around $183 billion worth of stablecoin, according to the report, and has described its wider investment portfolio as worth about $20 billion.
The company employs only a few hundred people globally despite the scale of its financial operations.
Some policymakers have raised concerns about the growing connection between stablecoins and the traditional financial system, while Tether maintains that its digital currency is fully backed by real-world assets.
The collapse of its Uruguay mining venture shows that even a company with substantial financial resources faces practical limits when expanding into energy-intensive industries.
For bitcoin miners, the lesson is particularly clear: access to electricity must not only be reliable but also sufficiently inexpensive to make mining economically sustainable.
