Tether Abandons Bitcoin Mining in Uruguay Amid Energy Struggles

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, Reuters reported on 2026-08-21. The sites in Uruguay's Florida department were presented in 2023 as Tether's first major Bitcoin mining venture in South America. A former contractor told Reuters Tether spent roughly $60 million on each of the two sites. By late 2025, crypto.news reported the company had told 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.

Background

When Tether announced the Uruguay operation in May 2023, it did not disclose an investment figure, describing the country as the "perfect platform" because of its renewable energy supply and reliable electricity grid. The project was framed as a testing ground before potential expansion into Brazil, Paraguay and Argentina, according to the source. A former contractor who worked with the company said Tether initially viewed Uruguay as an entry point for a much larger regional mining operation, citing political stability, established infrastructure and an electricity system powered heavily by renewable sources, with the Florida facilities allowing the company to test its mining model before committing more capital elsewhere. Industry sources told Reuters that Tether CEO Paolo Ardoino and chairman Giancarlo Devasini have also been frequent visitors to the coastal resort of Punta del Este. The source also notes that another $50 million had been earmarked for infrastructure expected to pass to UTE and Uruguay's National Interconnected System.

What happened

According to 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 state utility UTE. At the core of the failure 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; UTE interpreted the same amount as the maximum level available under the agreement. As demand at the facilities increased, the difference became critical, and one former contractor told Reuters 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 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, 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 Bitcoin price, hashprice or mining-difficulty figures, so no market pricing data can be reported here. The numbers present are project-level: an estimated cost of around $120 million for the Uruguay venture, with a former contractor telling Reuters 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, while another $50 million had been earmarked for infrastructure expected to pass to UTE and Uruguay's National Interconnected System. The company had informed Uruguay's labor authorities it would cease local operations and had laid off 30 of its 38 employees. 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 source describes the project as having been intended as a testing ground before potential expansion into Brazil, Paraguay and Argentina, but gives no figures on any flows, revenues or capacity at those planned markets.

Why it matters

The collapse ends what the source describes as Tether's first major Bitcoin mining venture in South America, a project presented in 2023 as a testing ground before potential expansion into Brazil, Paraguay and Argentina. A former contractor who worked with the company said Tether had initially viewed Uruguay as an entry point for a much larger regional mining operation, so the abandonment removes that base before any wider commitment was made. The dispute also illustrates how a single contract interpretation can determine the fate of a capital-intensive mining site: Tether read a provision as a minimum allocation that could be increased, while UTE read the same amount as a maximum, and the source says the sites sometimes lacked enough electricity to operate for days at a time. The timeline shows the disagreement was underway by November 2024, before Uruguay's new left-leaning government took office in March 2025 and appointed new UTE directors, after which the utility adopted a firmer position on renegotiating. The source also notes $50 million earmarked for infrastructure expected to pass to UTE and the National Interconnected System.