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A power contract dispute with Uruguay's state utility has ended Tether's biggest South American venture.
Tether had an ambitious plan to build a mining operation for Bitcoin in Uruguay, but it was the subject of a long legal dispute and has now come to an end. The stablecoin giant decided to abandon the project that was supposed to be valued at $120 million.
The project was announced in 2023 and was the company's biggest venture in South America so far. It was also presented as a gateway for a broader regional expansion. Tether couldn't resolve a dispute with the state-owned power companies.
Why Uruguay Looked Like the Perfect Mining Hub
Uruguay seemed to be the perfect spot for Tether's expansion. The country generates most of its energy from renewable sources; it has one of the best power grids in South America, and the government is stable and pro-business. Sustainability and green business practices have long been one of the biggest concerns for crypto miners, and sustainable mining has been the goal for most mining companies.
Experts on crypto, such as those from CryptoManiaks, argued that Uruguay could be a testing ground for further expansion into Brazil and Argentina. Former contractors involved with the development estimated that Tether invested roughly $60 million into each of the two mining sites. Tether has created a global presence, with its coins used everywhere from crypto exchanges in Pakistan to gambling sites in Singapore, but South America was to be its ground operation for mining.
The Power Contract That Changed Everything
Electricity was the only issue that caused the project to fail, according to all available sources. According to people familiar with the negotiations, Tether and Uruguay's state utility, UTE, interpreted the mining company's power contract in completely different ways. Tether believed that the electricity allocation they agreed on was the minimum supply, while UTE treated it as a maximum.
As Tether expanded its operations and required more power, the disagreement turned out to be costly. Bitcoin mining is especially energy-dependent, and as the operations grew, the facility didn't have enough resources to continue its operations. It went without power for days at a time. The project was therefore not profitable, especially given how expensive the mining equipment has become.
The situation worsened further when a new government was formed in 2025 and appointed new leadership at UTE. There was an effort to renegotiate the price of electricity, but the negotiations took too long, and eventually Microfin, Tether's local operating company, stopped paying its electricity bills. There was a new draft of the contract created by both parties, but neither of them signed it, and UTE disconnected power to both facilities in July 2025, effectively ending the mining operations.
What Happened to the Project and Its Workers?
Once there was no power, the project stopped, and Microfin informed Uruguay's labor authorities that it would cease operations and lay off most of its workforce. This was especially difficult for the local community, which expected the project to bring in long-term employment.
Sources reveal that Microfin later solved the issue of outstanding debt with UTE and therefore put an end to the whole project. The physical infrastructure is left behind, and it now remains the only thing left of the whole multi-million investment.
The episode also offered a rare glimpse into Tether's investment strategy. The company is famously secretive about its business practices. It invests billions of dollars across crypto-related industries, but it only discloses the most basic information, and this controversy led to the public learning more about the project.
The Bigger Picture: Bitcoin Mining's New Reality
Tether withdrawal reflects broader trends in the crypto mining industry. Mining economics have become significantly more difficult since the 2024 Bitcoin halving, which permanently reduced the block rewards miners receive for validating transactions. The rewards for miners are therefore lower, while the cost of electricity has gone up.
Many mining companies are therefore pursuing alternatives. This includes upgrading to more energy-efficient hardware, relocating to countries with lower electricity prices, and using mining infrastructure to support artificial intelligence instead. The industry also requires high-performance computing, and many mining companies are pivoting towards AI.
For investors, the failed Uruguay venture delivers a clear lesson: abundant renewable energy alone is not enough to guarantee a successful mining operation. It's also essential to set up clear contracts and use competitive energy pricing. Long-term utility partnerships can be an important asset.
To Sum Up
Tether's effort to build a mining center in Uruguay has failed due to a dispute with the local energy company. The project would have a great impact on the local community, and it should have been a first step towards the company's long-term plans in South America.
It failed due to the rising need for inexpensive electricity, which is one of the main problems the industry is facing.
