Tether Refutes Allegations of Abandoning Cryptocurrency Initiative in Uruguay

Tether, the stablecoin issuer, has refuted widespread local media reports claiming it is withdrawing from Uruguay due to a $4.8 million debt dispute with one of the state-owned electricity entities.

According to Telemundo, a local news outlet, Tether ceased its crypto mining operations and future plans after the National Administration of Power Plants and Electric Transmissions (UTE) disconnected power to its facilities for failing to pay a $2 million electricity bill from May.

The report also indicated that Tether owes approximately $2.8 million for other local projects, bringing its total liabilities to around $4.8 million, not including fines and surcharges, as reported by Busqueda, which originally broke the story two days earlier.

However, Tether disputed these claims in statements to Cointelegraph on Monday, saying: “We continue to evaluate the best way forward in Uruguay and the region more broadly. While reports have speculated an exit from the region, these do not accurately reflect the situation.”

Tether acknowledged the debt issue, stating that the local entity operating the crypto mining facilities has been in “ongoing discussions with the government to resolve the outstanding friction.”

“Tether remains supportive of these efforts and of a constructive path forward that reflects our long-term commitment to sustainable opportunities in the region.”

Tether announced plans to initiate crypto mining in Uruguay in November 2023, with local media expecting investments could reach up to $500 million.

Electricity costs in Uruguay are high by LATAM standards

While Tether denied the exit, local reports linked the alleged shutdown to elevated electricity costs, which Tether chose not to address. Uruguay’s relatively steep electricity rates have made it less appealing for energy-intensive activities like crypto mining and AI.

Electricity prices in Uruguay range from about $60 to $180 per megawatt hour (MWh), significantly higher than in Paraguay, where it can be produced for approximately $22 MWh from the Itaipu hydropower plant.

Tether also operates Bitcoin mining facilities in Paraguay.

Tether wouldn’t be the first crypto miner to leave Uruguay

In 2018, South American Bitcoin mining firm Vici Mining relocated its operations from Uruguay to Paraguay to take advantage of the lower electricity prices.

Vici engineer Nicolás Ribeiro told Telemundo: “If you look globally at the average electricity price, Uruguay is well above it. Although setting up in a new country is always challenging, when you consider that 80% of operating costs are tied to electricity, it becomes a significant factor in deciding where to establish operations.”