Tether’s efforts to broaden Bitcoin mining in Uruguay have come to a halt after the state utility severed power to its local associate.
UTE, the national electric provider, ceased supply in late July due to outstanding bills amounting to nearly $5 million. This disagreement has also stymied expansion initiatives in the Flores and Florida regions of the country.
Tether’s LATAM Bitcoin Mining Expansion Plan Faces Significant Obstacles
The USDT stablecoin issuer entered Uruguay in 2023, pledging to utilize renewable energy for Bitcoin mining. Uruguay’s abundant wind and hydroelectric resources made it an ideal location for sustainable energy projects.
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Tether collaborated with a licensed operator, Microfin, to construct facilities and secure long-term electricity agreements.
However, tension escalated as costs and guarantees increased. UTE demanded substantial deposits to enable the energy contracts, while Microfin sought adjustments to tariffs.
Discussions resulted in a memorandum of understanding in June, but unpaid debts lingered. The inability to resolve these debts prompted the shutdown.
Tether had declared broader objectives to command approximately 1% of the global Bitcoin network. The company committed hundreds of millions of dollars to South American mining projects, comprising sites in Paraguay.
The Uruguayan expansion was intended to solidify those aspirations.
The firm has stressed that USDT reserves are distinct from its operational activities. Mining revenue and energy assets are meant to diversify Tether’s portfolio beyond stablecoin issuance.
Earlier this year, it also invested in a stake in a Latin American agribusiness to connect stablecoin usage to commodity trading.
The setback in Uruguay brings into question the feasibility of energy-intensive mining in high-cost markets. While Paraguay and Texas have drawn miners with lower electricity costs, Uruguay’s grid imposes stricter guarantees.
Currently, Tether’s negotiations with UTE are ongoing, but the timeline for resuming operations remains uncertain.
This situation underscores the risks of linking stablecoin companies to unpredictable mining ventures. Tether has not clarified whether it will scale back or completely abandon its expansion in Uruguay.
