How Tether's Bitcoin mining plans in Uruguay unravelled

Tether's planned Bitcoin mining expansion in Uruguay has collapsed after an electricity supply dispute with state utility UTE left two facilities without enough power, ending a project estimated to have cost around $120 million, according to a crypto.news report citing Reuters. The project, presented in 2023 as Tether's first major Bitcoin mining venture in South America, was abandoned after disagreements over electricity allocations disrupted operations and led its local entity, Microfin, to terminate contracts with UTE. A former contractor told Reuters that Tether spent roughly $60 million on each of the two sites in Uruguay's Florida department. Tether did not disclose an investment figure when it announced the operation in May 2023, describing the country as the "perfect platform" because of its renewable energy supply and reliable electricity grid.

Background

When Tether announced the Uruguay operation in May 2023, it described the country as the "perfect platform" because of its renewable energy supply and reliable electricity grid, according to the crypto.news report. The project was presented as Tether's first major Bitcoin mining venture in South America, with Uruguay serving as a testing ground before potential expansion into Brazil, Paraguay and Argentina. Tether had initially viewed Uruguay as an entry point for a much larger regional mining operation, according to a former contractor who worked with the company. The country offered political stability, established infrastructure and an electricity system powered heavily by renewable sources, while the Florida facilities allowed the company to test its mining model before committing more capital elsewhere. Tether CEO Paolo Ardoino and chairman Giancarlo Devasini have also been frequent visitors to the coastal resort of Punta del Este, industry sources told Reuters. The city has attracted wealth, according to the source text, which is truncated. By late 2025, crypto.news reported that the company had informed Uruguay's labor authorities that it would cease local operations and had laid off 30 of its 38 employees. More than $100 million had already been spent at the time, while another $50 million had been earmarked for infrastructure that was expected to pass to UTE and Uruguay's National Interconnected System.

What happened

According to the crypto.news report citing Reuters, Tether abandoned two mining sites in Uruguay's Florida department after disagreements over electricity allocations disrupted operations and eventually led its local entity, Microfin, to terminate contracts with UTE. A former contractor told Reuters that Tether spent roughly $60 million on each of the two sites, putting the total cost at around $120 million. At the core of the failed project was a disagreement over how much power Microfin could draw from UTE, according to two former Tether contractors and a source at the state utility cited by Reuters. Tether understood a provision in its electricity contract as setting a minimum power allocation that could later be increased, one former contractor said, while UTE interpreted the same amount as the maximum level available under the agreement. As demand at the mining facilities increased, the difference became critical. One former contractor told Reuters that the sites sometimes lacked enough electricity to operate for days at a time. An internal UTE briefing reviewed by Reuters showed that the disagreement was already underway by November 2024. Political changes later complicated negotiations, according to people familiar with the discussions. Uruguay's new left-leaning government took office in March 2025 and appointed new directors at UTE, after which the utility adopted a firmer position on renegotiating the electricity agreement, one former contractor told Reuters. Two months later, Microfin stopped paying electricity bills. The company informed UTE in June 2025 that it intended to terminate its contracts, according to the utility's internal briefing. The two sides still attempted to preserve the project. UTE's board approved a memorandum of understanding and revised contract documents, but Tether representatives did not attend the scheduled signing, minutes included in the briefing showed. With the agreement unsigned and bills outstanding, UTE disconnected electricity to the facilities on July 25. Earlier reporting put the unpaid balance connected to the two sites at roughly $5 million. Microfin eventually settled the outstanding debt in December, UTE told Reuters.

Market impact

The sources provide limited market data. The project is estimated to have cost around $120 million, with a former contractor telling Reuters that Tether spent roughly $60 million on each of the two sites. By late 2025, crypto.news reported that more than $100 million had already been spent at the time, while another $50 million had been earmarked for infrastructure that was expected to pass to UTE and Uruguay's National Interconnected System. Earlier reporting put the unpaid balance connected to the two sites at roughly $5 million, which Microfin eventually settled in December, UTE told Reuters. The sources do not provide Bitcoin prices, hash rate figures, or broader market flow data. The report also notes that Tether had laid off 30 of its 38 employees by late 2025, according to crypto.news. No other financial or market figures are present in the source texts.

Why it matters

The collapse of Tether's Uruguay project matters because it was presented in 2023 as the company's first major Bitcoin mining venture in South America, with Uruguay serving as a testing ground before potential expansion into Brazil, Paraguay and Argentina. Tether had initially viewed Uruguay as an entry point for a much larger regional mining operation, according to a former contractor who worked with the company. The country offered political stability, established infrastructure and an electricity system powered heavily by renewable sources, while the Florida facilities allowed the company to test its mining model before committing more capital elsewhere. The failure, stemming from a dispute over electricity allocations with state utility UTE, illustrates the operational and regulatory risks that can affect large-scale mining investments even in jurisdictions with reliable grids and renewable energy. The sources also indicate that political changes complicated negotiations after Uruguay's new left-leaning government took office in March 2025 and appointed new directors at UTE, after which the utility adopted a firmer position on renegotiating the electricity agreement. The project's abandonment, with around $120 million estimated cost and more than $100 million already spent by late 2025, may affect Tether's regional expansion plans, though the sources do not specify further consequences.