How Tether's bitcoin mining plans in Uruguay unraveled

Tether has abandoned a Bitcoin mining project in Uruguay that was estimated to have cost around $120 million, after a dispute with state utility UTE over electricity allocations left two facilities without enough power, Reuters reported on 2026-08-21. The project, run locally through Tether's entity Microfin in Uruguay's Florida department, had been presented in 2023 as the company's first major Bitcoin mining venture in South America and a testing ground for expansion into Brazil, Paraguay and Argentina. A former contractor told Reuters Tether spent roughly $60 million on each of the two sites. Tether did not disclose an investment figure when it announced the operation in May 2023, calling Uruguay 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" for mining, citing its renewable energy supply and reliable electricity grid, and did not disclose an investment figure. The project was framed as Tether's first major Bitcoin mining venture in South America and as a testing ground before potential expansion into Brazil, Paraguay and Argentina. According to a former contractor who worked with the company and spoke to Reuters, Tether initially viewed Uruguay as an entry point for a much larger regional mining operation, drawn by political stability, established infrastructure and an electricity system powered heavily by renewable sources; the Florida facilities were meant to let the company test its mining model before committing more capital elsewhere. Reuters also reported that Tether CEO Paolo Ardoino and chairman Giancarlo Devasini have been frequent visitors to the coastal resort of Punta del Este, which industry sources said has attracted wealth. By late 2025, crypto.news reported that the company had informed Uruguay's labor authorities it would cease local operations and had laid off 30 of its 38 employees, with more than $100 million already spent at the time and another $50 million earmarked for infrastructure expected to pass to UTE and Uruguay's National Interconnected System.

What happened

According to Reuters, the collapse centred on a disagreement over how much power Microfin, Tether's local entity, could draw from UTE. Two former Tether contractors and a source at the state utility told the news agency that Tether understood a provision in its electricity contract as setting a minimum power allocation that could later be increased, 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 said the sites sometimes lacked enough electricity to operate for days at a time. An internal UTE briefing reviewed by Reuters showed the disagreement was already underway by November 2024. Political changes later complicated negotiations: 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, and in June 2025 it informed UTE it intended to terminate its contracts, according to the utility's internal briefing. The two sides still attempted to preserve the project, and 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, and Microfin eventually settled the outstanding debt in December, UTE told Reuters. Tether and Microfin did not respond to the news agency's requests for comment about the contract.

Market impact

The sources provide no market prices, trading volumes or capital-flow data connected to the collapse, so the financial picture is limited to project-level figures. Reuters reported the project was estimated to have cost around $120 million, with a former contractor saying Tether spent roughly $60 million on each of the two Florida department sites. Tether itself disclosed no investment figure when it announced the Uruguay operation in May 2023. By late 2025, crypto.news reported that more than $100 million had already been spent and that another $50 million had been earmarked for infrastructure expected to pass to UTE and Uruguay's National Interconnected System. On employment, crypto.news reported Tether had informed Uruguay's labor authorities it would cease local operations and had laid off 30 of its 38 employees. On outstanding obligations, earlier reporting put the unpaid balance connected to the two sites at roughly $5 million, and UTE told Reuters that Microfin eventually settled the outstanding debt in December. The sources do not quantify any effect on Tether's broader business, on Bitcoin mining economics or on regional expansion plans beyond noting that Uruguay had been intended as a testing ground before potential moves into Brazil, Paraguay and Argentina.

Why it matters

The sources support several consequences. First, the episode ends what Tether presented in 2023 as its first major Bitcoin mining venture in South America, a project Reuters reported was estimated to have cost around $120 million, with roughly $60 million spent on each of two sites according to a former contractor. Second, it removes the testing ground Tether had intended to use before potential expansion into Brazil, Paraguay and Argentina; a former contractor told Reuters the company had initially viewed Uruguay as an entry point for a much larger regional mining operation. Third, the dispute illustrates how contract interpretation can determine outcomes in power-intensive mining: Tether read a contract provision as a minimum allocation that could be increased, while UTE read the same amount as a maximum, and one former contractor said the sites sometimes lacked enough electricity to operate for days. Fourth, the timeline shows how political change fed into the outcome, with Uruguay's new left-leaning government taking office in March 2025 and appointing new UTE directors, after which the utility adopted a firmer position on renegotiation. Finally, the sources record local costs: 30 of 38 employees laid off by late 2025, a roughly $5 million unpaid balance, disconnection on July 25 and settlement of the debt in December.