- Tether has scrapped its Bitcoin mining operation in Uruguay following a power contract dispute that exposed the vulnerability of mining businesses dependent on uncertain electricity supplies.
- The company walked away from a Uruguay mining expansion estimated by a former contractor at around $120 million after clashing with state-owned power provider UTE.
- The disagreement centered on how much electricity Tether was actually entitled to use under its agreement with the utility, according to a Reuters investigation reviewed by Kontan.
- The case shows how a disputed contract provision and a change in government can unravel a major investment over several years, regardless of a company’s financial strength. Tether oversees roughly $183 billion in stablecoin issuance.
What Went Wrong With Tether’s Uruguay Mining Plans
- Tether unveiled plans in 2023 to establish two Bitcoin mining facilities in Uruguay’s Florida Department, pointing to the country’s renewable energy mix, stable grid, political environment and tax advantages.
- Its local subsidiary, Microfin, operated the two facilities and initially ran them without significant issues. The trouble began when Tether and UTE disagreed over the meaning of the electricity allocation specified in their contract.
- Tether and a former contractor considered the agreed power figure a baseline that could be increased as the mining sites expanded.
- UTE took the opposite view, treating the figure as a maximum allocation that could only be raised through a fresh agreement, according to a former Tether contractor and a source familiar with the utility.
- UTE documents reviewed by Reuters indicate that the disagreement was already underway by November 2024. As the facilities demanded more electricity, they reportedly experienced outages and periods of insufficient power lasting several days.
Political Transition Adds Pressure
- The standoff intensified after Uruguay’s new left-wing government took office in March 2025 and installed UTE leadership that adopted a harder stance toward Tether’s requests for revised power terms.
- Microfin stopped paying its electricity bills in May 2025 and notified UTE in June that it planned to terminate the agreement.
- UTE’s board approved a memorandum of understanding and drafted a replacement contract, but Tether representatives did not attend the signing. With the agreement unsigned and bills unpaid, UTE disconnected the mining sites on July 25, 2025.
- Tether later informed Uruguay’s labor authorities in November that it would end the operation and dismiss most employees. Microfin settled its outstanding electricity debt with UTE the following month.
Why the Exit Matters for Crypto Mining
- Tether CEO Paolo Ardoino has said the company has invested more than $2 billion in energy generation and Bitcoin mining. Uruguay was expected to serve as an initial foothold for expansion into Brazil, Paraguay and Argentina.
- Talos senior analyst Tanay Ved said mining companies are responding to tighter margins after the April 2024 halving by deploying more efficient hardware, finding lower-cost electricity and expanding into AI and high-performance computing.
- Crypto mining specialist Nicolas Ribeiro said Uruguay’s dependable grid and connectivity could make it more attractive for AI data centers than Bitcoin mining, where profitability relies heavily on having steady access to inexpensive electricity.
