Tether shuts down $120 million Bitcoin mining project in Uruguay after electricity dispute

Tether, the company behind the world’s most traded stablecoin, has ended its $120 million Bitcoin mining operations in Uruguay after a prolonged dispute with the country’s state electricity provider. The withdrawal signals both major financial losses for Tether and a shift in regional mining ambitions.

Electricity dispute forces closure

Tether launched its Uruguay Bitcoin mining initiative in 2023, citing the nation’s renewable energy potential, stable political environment, and reliable grid as key factors for selecting the location. The company established two mining sites in Uruguay’s Florida department. Each required an estimated $60 million investment and together represented one of Tether’s largest early moves in South American mining.

However, as mining operations ramped up, conflicts emerged over electricity supply allowances. Tether believed its agreement with the state-run utility UTE allowed for scalable power supplies, while UTE insisted the contract strictly capped power delivery to the Microfin-operated sites, Tether’s local partner. As the facilities sought more electricity to meet rising mining demands, UTE refused, leaving the operations unable to sustain full productivity.

Internal documents show the dispute intensified by November 2024, leading to extended periods of insufficient power. Production suffered, and the sites became increasingly unprofitable as a result.

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Failed negotiations and contract termination

Negotiations between Microfin and UTE escalated following a government change in March 2025. With new leadership at UTE, the electricity provider adopted a firm stance, resisting amendments to the original agreement. Microfin eventually stopped paying electricity bills and notified UTE of its intention to terminate existing contracts. Efforts to salvage the venture through a renegotiated agreement and a memorandum of understanding collapsed when Tether representatives declined to attend the contract signing.

On July 25, UTE cut power to the mining sites after payments lapsed and no new deal was reached. Microfin then informed labor authorities of plans to cease mining activities and lay off staff. Outstanding debts to UTE were settled later in December, but the facilities never resumed operations.

Tether’s efforts to expand its mining presence in South America have been set back by regulatory challenges and unfavorable energy economics in Uruguay, with lasting implications for its regional ambitions.

Shifts in Bitcoin mining economics

Tether viewed Uruguay as a strategic entry point for broader mining expansion into the continent, including future projects in Brazil, Paraguay, and Argentina. The company highlighted Uruguay’s predominantly renewable energy mix and robust infrastructure as strengths, aiming to refine its operational model before scaling to neighboring countries.

Yet, rising electricity costs and stricter supply contracts have diminished Uruguay’s appeal for Bitcoin mining, especially after Bitcoin’s April 2024 halving event reduced block rewards and squeezed profit margins. Declining crypto market valuations and increasing operational expenses have further impacted miners worldwide.

Despite the setbacks in Uruguay, Tether continues to invest in mining, renewable energy ventures, and software platforms. The company has shifted its focus to new mining operations in Brazil and released open-source tools for mining management. Some mining companies are also moving infrastructure to artificial intelligence and high-performance computing as Bitcoin mining profitability declines.

Mini dictionary: Tether, a company based in the British Virgin Islands, is the issuer of USDT—the most widely used stablecoin in global crypto markets. The firm is a major player in digital asset infrastructure and has recently expanded into energy and mining sectors.