Tether has pulled the plug on its Bitcoin mining venture in Uruguay after a disagreement over electricity access underscored the risks of depending on uncertain power supplies.
The stablecoin issuer abandoned a mining project in Uruguay that a former contractor estimated was worth about $120 million, following a contractual dispute with state-owned utility UTE.
At the heart of the disagreement was the amount of electricity Tether was guaranteed under its agreement with UTE, according to a Reuters investigation reviewed by Kontan.
The episode highlights more than a failed mining expansion. It demonstrates how unclear contract terms and a shift in political leadership can derail a major industrial project, even for a company with roughly $183 billion in stablecoin issuance.
How Tether’s Uruguay Mining Project Unraveled
Tether announced in 2023 that it would develop two Bitcoin mining facilities in Uruguay’s Florida Department, attracted by the country’s renewable energy resources, reliable power network, political stability and favorable tax environment.
The company’s local unit, Microfin, managed both facilities and initially operated without major disruptions. Problems emerged over differing interpretations of the electricity agreement.
Tether and a former contractor understood the contracted power allocation to represent a minimum amount that could be increased as the mining operations grew.
UTE interpreted the same figure as a ceiling, meaning Tether would need a new agreement before consuming additional electricity, according to a former Tether contractor and a UTE source.
Internal UTE records reviewed by Reuters show that the disagreement had surfaced by at least November 2024. As electricity requirements increased, the mining sites reportedly faced shortages that left them without enough power for days at a time.
Government Change Deepened the Dispute
Tensions increased after Uruguay’s left-wing government assumed office in March 2025 and appointed new UTE leadership that took a stricter approach to Tether’s efforts to renegotiate the power contract.
Microfin stopped paying its electricity bills in May 2025 and informed UTE the next month that it intended to terminate the agreement.
UTE subsequently approved a memorandum of understanding and prepared a new draft contract, but Tether representatives failed to attend the signing. With no agreement finalized and unpaid bills mounting, UTE shut off electricity to the facilities on July 25, 2025.
Tether told Uruguay’s labor authorities in November 2025 that it planned to cease operations and cut most of its workforce. Microfin later paid its outstanding UTE debt in December.
The Bigger Lesson for Bitcoin Miners
Tether CEO Paolo Ardoino has said the company has invested more than $2 billion in energy production and Bitcoin mining. Uruguay was initially viewed as a launchpad for expansion into other South American markets, including Brazil, Paraguay and Argentina.
Talos senior analyst Tanay Ved said miners are increasingly adopting more efficient machines, seeking cheaper energy and exploring AI and high-performance computing to maintain profitability after the April 2024 Bitcoin halving reduced mining rewards.
Crypto mining specialist Nicolas Ribeiro said Uruguay’s reliable grid and strong connectivity may ultimately make the country better suited to AI data centers than Bitcoin mining, where profitability depends heavily on consistently securing low-cost electricity.
