Tether Drops $120M Uruguay Bitcoin Mining Project After Power Dispute

Tether has reportedly walked away from a Bitcoin mining project in Uruguay that may have cost the company around $120 million, ending what was expected to become its entry point into a broader South American mining expansion.

According to a Reuters report, the project broke down after Tether and Uruguay’s state-owned power company, UTE, disagreed over how much electricity could be supplied to two mining facilities in the Florida department.

The dispute centered on the wording of their original agreement. Tether reportedly interpreted the contracted electricity allocation as a minimum that could later be increased, while UTE considered it a maximum limit.

The facilities initially operated successfully and generated revenue, according to former contractors cited by Reuters. Problems emerged as electricity demand grew. At times, the sites reportedly went without enough power for several days, putting pressure on the mining operation.

Both sides attempted to resolve the disagreement through a revised contract. However, Tether representatives reportedly failed to attend the scheduled signing, leaving the new agreement unsigned.

The situation deteriorated further after Uruguay's government changed in March 2025, when Yamandú Orsi took office and new leadership was appointed at UTE. Sources familiar with the project told Reuters that negotiations became more difficult under the new management.

Tether's Uruguayan subsidiary, Microfin, subsequently stopped paying its electricity bills. In June 2025, the company informed UTE that it planned to terminate its contracts. UTE eventually disconnected power to the mining sites on July 25.

Several months later, on Nov. 25, Tether notified Uruguay's labor authorities that it planned to shut down the operation and dismiss most of its employees.

The estimated $120 million investment has not been publicly confirmed by Tether. The company also did not respond to requests for comment from Reuters or The Block.

Tether had announced its Uruguay mining plans in May 2023, highlighting the country's renewable energy resources and established electricity network. The company reportedly saw the country as a testing ground for a much larger regional strategy, with potential expansion into Brazil, Paraguay and Argentina.

That broader strategy has continued despite the Uruguay setback.

In 2025, Tether said it had committed more than $2 billion to energy and mining infrastructure across 15 locations in Uruguay, Paraguay and El Salvador. The company has since expanded its involvement in renewable energy, including acquiring a 70% stake in renewable energy producer Adecoagro and reaching an agreement to use surplus electricity from its operations for Bitcoin mining.

Tether has also been building out its mining business through technology and financial investments. The company released an open-source mining operating system, acquired an 8.2% stake in mining finance firm Antalpha and began developing modular mining equipment with Canaan and ACME Swisstech.

The Uruguay experience also highlights a growing problem for Bitcoin miners: electricity economics.

Mining operations require large amounts of relatively cheap power to remain competitive. Higher electricity costs, weaker Bitcoin prices and the growing profitability of alternative uses for computing infrastructure are forcing miners to reconsider where and how they operate.

Artificial intelligence is one such alternative. Data centers capable of supporting AI training and inference can potentially generate better returns than Bitcoin mining in regions where electricity is expensive.

Uruguay may be a good example. The country has a reliable power grid and strong internet infrastructure, but electricity costs can make large-scale Bitcoin mining less attractive. Those same characteristics could make the country more suitable for AI-focused data centers.

The economics of mining are becoming increasingly fluid as a result. Operators can no longer simply secure power and run machines indefinitely. Facilities may be opened, closed or relocated depending on electricity prices, market conditions and the potential returns from other computing applications.

For Tether, the failed Uruguay project appears to be a setback rather than an end to its mining ambitions. The company remains one of the biggest players in the crypto industry through its USDT stablecoin, which has roughly $183 billion in circulation, while continuing to invest heavily in energy, mining and infrastructure.

The episode shows, however, that even companies with substantial capital face difficult trade-offs when scaling Bitcoin mining operations across international markets.