Tether Halts $120 Million Bitcoin Mining Project in Uruguay Over Power Dispute

Tether Halts $120 Million Bitcoin Mining Project in Uruguay Over Power Dispute

Tether’s ambitious Bitcoin mining expansion in Uruguay has come to an abrupt end following a dispute with the state utility, UTE, regarding electricity supply. The project, which was estimated to cost around $120 million, involved two mining facilities in the Florida department of Uruguay.

Power Supply Dispute Affects Operations

The electricity allocation issues arose when UTE disconnected the mining sites in July 2025 due to failed contract negotiations and unpaid electricity bills. Tether had invested heavily in the operation, with a former contractor estimating that approximately $60 million was spent at each site. By late 2025, reports indicated that Tether had informed labor authorities of its decision to cease local operations, laying off a significant portion of its local workforce.

Disagreements on Power Allocation

At the heart of the project’s failure was a disagreement over the amount of power Microfin, Tether’s local entity, could draw from UTE. Tether believed an agreement permitted a minimum power allocation that could later be increased, while UTE interpreted it as the maximum allocation. This misunderstanding resulted in the facilities experiencing inadequate power supply and operational disruptions.

Political Changes Complicate Negotiations

Negotiations were further complicated by political changes when Uruguay’s new left-leaning government took office in March 2025, appointing new directors at UTE who took a firmer stance on renegotiations. Microfin stopped paying its electricity bills in May 2025 and ultimately decided to terminate its contracts with UTE.

Plans for Regional Expansion Stalled

Initially, Tether viewed its operation in Uruguay as a stepping stone for expansion into other South American countries, including Brazil, Paraguay, and Argentina. However, the failure of this project has raised questions about the company’s future in the region.

Continuing Investment in Bitcoin Mining

Despite the setbacks in Uruguay, Tether remains committed to expanding its Bitcoin mining endeavors. The company has signed agreements in Brazil to utilize renewable energy for its Bitcoin operations. Tether continues to invest significantly in energy production and mining infrastructure, focusing on renewable energy as part of its mining strategy.

The Future of Bitcoin Mining in Uruguay

As the conditions for Bitcoin mining evolve, experts suggest that Uruguay’s electricity prices could be a challenge for future mining endeavors, raising concerns about the viability of such projects in the region. Nevertheless, Tether’s ongoing investment strategy indicates a sustained interest in the cryptocurrency mining landscape.