Tether Halts $500M Uruguay Crypto Mining Project Over Energy Disputes

Tether, the stablecoin giant, announced that it has stopped its $500 million crypto mining operation in Uruguay by laying off 30 of its 38 staff. Tether has halted its mining operation in the region by citing the high energy costs and lack of tariff frameworks. According to multiple sources, Tether Holdings has officially confirmed its permanent exit to the authorities of the Ministry of Labor and Social Security (MTSS), after a meeting at the headquarters of the National Directorate of Labor (Dinatra) on Tuesday.  

The major reasons behind the shutdown are unfavourable high energy costs and a lack of a proper tariff framework for energy-intensive operations like crypto mining. Tether faced significant operational challenges this year after its local collaborator failed to pay bills to the national electricity provider (UTE), resulting in an abrupt suspension of power supply at its mining sites. Unpaid bills reportedly ran into the millions, according to media sources. In July, mainstream media reported that UTE had disconnected two of Tether’s facilities due to debts approaching $5 billion, which Tether claimed had been covered by a warranty deposit.

El Observador, the prominent Uruguayan newspaper, has reported that after back-and-forth negotiations over UTE tariffs, the multinational Tether would leave Uruguay. It also reported that Tether would halt its operations in Uruguay due to “high electricity costs” and “the lack of a competitive tariff framework that matched the magnitude of its investment.” Tether responded that it had confidence in the country’s potential but that for projects of this scale, a competitive and predictable tariff framework was essential, and that the failure to reach an agreement forced them to rethink their strategy. 

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Tether’s Latin America ambitions face a setback as the Uruguay project winds down

Stablecoin issuer Tether’s mining operations in Uruguay come to an end. They established mining operations in Uruguay in May 2023 and reportedly planned a large-scale investment of ~ US$500 million in the country, including building data-processing centers and a 300 MW renewable energy park. The USDT issuer has already spent $100 million and an additional $50 million to construct three Data Processing Centers in the departments of Florida and Tacuarembó provinces, which will now become the property of Administración Nacional de Usinas y Trasmisiones Eléctricas(UTE). 

Paolo Ardoino, the CTO of Tether, stated during the launch that he was optimistic about the plan and believed that they could capitalize on Uruguay’s stance on the renewable energy plan. Ardoino stated during the launch of mining operations in the region that by harnessing the power of Bitcoin and Uruguay’s renewable energy capabilities, Tether was leading the way in sustainable and responsible Bitcoin mining. In mid-August 2024, Tether sent an official letter to the UTE board explaining the problems and repeated their requests. They also mentioned that their shareholders needed a clear answer by the end of August. 

In September, reports and rumors circulated about Tether’s potential exit from Uruguay, but the company firmly dismissed speculation of any withdrawal. In September, the company stated in response to CriptoNoticias that Tether was committed to developing long-term initiatives in Latin America, especially those that leveraged renewable energy, and that they continued to evaluate the best path forward in Uruguay and the region as a whole. Multiple media, including Wu Blockchain, have now officially confirmed that Tether is leaving Uruguay 

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