Why Tether Is Leaving Uruguay’s Power-Hungry Bitcoin Mining Market

• Tether has shut down its Bitcoin mining operation in Uruguay after a disagreement over electricity access highlighted the risks of building mining facilities around power that is not contractually secure.
• The company abandoned a mining development in Uruguay that a former contractor estimated at about $120 million after a dispute with state-run electricity company UTE.
• The central issue was how much electricity Tether’s agreement with UTE actually allowed it to consume, according to a Reuters investigation reviewed by Kontan.
• The dispute shows how unclear power contracts and political changes can undermine major industrial investments, even for a company responsible for around $183 billion in stablecoin issuance.

Tether’s Uruguay Mining Dispute

• Tether announced in 2023 that it would develop two Bitcoin mining sites in Uruguay’s Florida Department, attracted by the country’s renewable energy capacity, stable grid, political environment and tax incentives.
• Microfin, Tether’s local subsidiary, ran the facilities and initially operated without major problems. The relationship later deteriorated over different interpretations of the electricity contract.
• Tether and a former contractor believed the contracted power amount was a minimum allocation that could increase as the mining sites expanded.
• UTE viewed the same figure as a maximum allowance and maintained that additional electricity would require a new agreement, according to a former Tether contractor and a source at the utility.
• Reuters-reviewed UTE documents from 2025 indicate the disagreement had been ongoing since at least November 2024. Growing demand reportedly left the facilities without sufficient electricity for days at a time.

Uruguay’s Political Shift Complicates Matters

• The dispute intensified after Uruguay’s new left-wing administration took office in March 2025 and appointed UTE leadership that took a firmer stance against Tether’s attempts to renegotiate the contract.
• Microfin stopped paying its electricity bills in May and informed UTE in June that it wanted to terminate the agreement.
• UTE’s board later approved a memorandum of understanding and drafted a new contract, but Tether representatives failed to attend the signing. With the agreement unsigned and payments overdue, UTE disconnected the facilities on July 25, 2025.
• Tether notified Uruguay’s labor authorities in November that it would end the operation and dismiss most employees. Microfin paid off its outstanding UTE debt in December.

Power Costs Become a Bigger Mining Concern

• Tether CEO Paolo Ardoino has said the company has invested more than $2 billion in energy generation and Bitcoin mining. Uruguay was initially intended to provide a foothold for expansion into Brazil, Paraguay and Argentina.
• Talos senior analyst Tanay Ved said miners are responding to reduced profitability after the April 2024 halving by adopting more efficient hardware, pursuing cheaper electricity and moving into AI and high-performance computing.
• Crypto mining specialist Nicolas Ribeiro said Uruguay’s reliable grid and strong connectivity could make it more suitable for AI data centers than Bitcoin mining, where profitability depends heavily on reliable access to low-cost electricity.