Why Did Tether Choose Uruguay For Bitcoin Mining?
Tether’s attempt to build a major Bitcoin mining operation in Uruguay ended with both planned sites abandoned after a dispute over electricity supply, showing how quickly the economics of industrial crypto mining can break down when access to cheap and reliable power changes.
The stablecoin issuer announced its move into Uruguay in May 2023, describing the country as an attractive base because of its renewable energy resources, reliable electricity grid and political stability. The project was intended to include two mining sites in the department of Florida and investment in local energy infrastructure.
A former contractor estimated that Tether spent roughly $60 million on each site, putting the combined investment at about $120 million. Uruguay was also intended to serve as a testing ground before Tether expanded mining operations into larger South American markets such as Brazil, Paraguay and Argentina.
The investment was notable for a country where annual foreign direct investment is around $2 billion. Tether has separately said it has invested more than $2 billion globally in energy production and Bitcoin mining as it uses profits from its USDT stablecoin business to expand into new industries.
Initial operations in Uruguay generated revenue, according to people familiar with the project. The problem emerged when electricity demand at the mining sites began to exceed what Tether believed it could obtain from state utility UTE.
How Did The Electricity Dispute Derail The Project?
The disagreement centered on the interpretation of Tether’s electricity contract. Tether understood the contracted amount as a minimum allocation that could later be increased, while UTE regarded it as the maximum amount of power the project was entitled to receive.
That distinction was critical for a Bitcoin mining operation. Mining profitability depends heavily on running large numbers of specialized computers continuously, which makes interruptions or limits on power supply particularly expensive.
As electricity demand increased, the sites were left without enough power for periods lasting several days. The disagreement was underway by November 2024 and later became harder to resolve after Uruguay’s new government took office in March 2025 and appointed new directors at UTE.
Microfin, Tether’s local legal entity, stopped paying electricity bills two months later and informed UTE in June 2025 that it intended to terminate its contracts. The two sides attempted to negotiate revised terms, and UTE’s board approved a memorandum of understanding and updated contract documents.
Tether representatives did not attend the planned signing. With the agreement unfinished and bills unpaid, UTE disconnected electricity to the mining sites on July 25. Tether later notified Uruguay’s labor authorities that operations would cease and most employees would be laid off. Microfin settled its outstanding electricity debts in December.
Investor Takeaway
Tether’s Uruguay experience shows that Bitcoin mining investments can become uneconomic quickly when assumptions about electricity availability or pricing fail. Infrastructure spending offers little protection if miners cannot secure enough low-cost power to keep machines operating continuously.
Why Are Bitcoin Mining Economics Getting Harder?
The Uruguay project also unraveled during a more difficult period for Bitcoin miners globally. The April 2024 Bitcoin halving cut the block reward available to miners, reducing the amount of Bitcoin they receive for the same amount of computing work.
That pressure became more severe as Bitcoin later fell from its 2025 peak. Miners therefore faced weaker revenue while electricity, equipment and infrastructure costs remained substantial.
Operators have responded by purchasing more efficient mining machines, relocating to markets with cheaper electricity or converting some computing infrastructure for artificial intelligence and high-performance computing workloads.
Uruguay presents a particular challenge. Its electricity system relies heavily on renewable energy and its grid is considered reliable, but power costs are relatively high compared with locations favored by large-scale crypto miners.
“Uruguay isn’t viable for mining — that’s the reality,” crypto mining specialist Nicolas Ribeiro said, arguing that the country’s power and connectivity infrastructure may be better suited to AI data centers than to Bitcoin mining.
What Does The Failure Mean For Tether’s Expansion Strategy?
The abandoned project is unlikely to end Tether’s mining ambitions. The company has continued investing in Bitcoin mining and related platforms elsewhere, including Brazil, while expanding into businesses ranging from data centers and artificial intelligence to media, biotechnology and sports.
Those investments are funded by a stablecoin business that controls roughly $183 billion in USDT and has become one of the world’s largest holders of U.S. Treasuries. Interest earned on those reserves has generated billions of dollars that Tether has been able to deploy outside its core stablecoin operations.
The Uruguay episode nevertheless illustrates a weakness in mining as a destination for that capital. Mining facilities are unusually dependent on local electricity economics, and their equipment can be moved relatively easily when conditions deteriorate.
“This plug-and-play infrastructure is very easy to do — literally pulling the plug and then move it to somewhere else,” said Pete Howson, an assistant professor at Northumbria University.
That flexibility benefits mining companies because they can redeploy equipment, but it can limit the long-term economic benefits for host countries expecting permanent jobs and infrastructure investment. For Tether, the larger lesson is that access to capital alone does not guarantee profitable mining. Power contracts, electricity prices and operating conditions can determine whether a nine-figure investment remains viable.
