Tether's $120 million Uruguay bitcoin mining project collapsed over a power contract dispute: Reuters

Tether abandoned an estimated $120 million Bitcoin (BTC) mining project in Uruguay, seen as a first step into the wider South American market, following a contractual dispute between the stablecoin issuer and state-owned power utility UTE, according to a recent report from Reuters. 

Tether and UTE disagreed on how much power the two mining sites were entitled to under the contract: Tether thought an agreed-upon power supply figure was a minimum that could be increased in the future, while UTE thought the figure represented a hard cap, per the report.

The two sites, located in Uruguay's Florida department, initially ran well and generated income, according to two former contractors. As the sites' electricity demand increased, however, the operation sometimes lacked sufficient power for days at a time.

Though both sides sought to resolve the dispute by signing a revised contract, Tether representatives reportedly did not show up to the signing, according to meeting notes obtained by Reuters. 

A former contractor and another source told Reuters that the dispute intensified after the election of the left-leaning government led by Yamandú Orsi, who took office in March 2025 and later appointed new directors of UTE. Per the sources, the new leadership took a harder line on the contract negotiations. 

Microfin, Tether's Uruguayan legal entity, stopped paying its electricity bills two months after the change in government. It told UTE in June that it intended to terminate its contracts.

With the revised agreement unsigned and the bills unpaid, UTE cut power to the sites on July 25, 2025. Tether notified Uruguay's labor authorities on Nov. 25 that it would end operations and lay off most of its staff, Reuters reported.

A source with knowledge of the deal estimated that Tether spent around $120 million on the project. The company never publicly disclosed the size of the investment. Tether did not respond to requests for comment from either Reuters or The Block. 

A planned 'first step' into South America

Tether's announcement of its Uruguay mining operation in May 2023 described the country as the "perfect platform" because of its renewable electricity generation and established grid. Reuters added that the country's political stability is attractive for foreign investors. 

A former contractor told Reuters that Tether viewed Uruguay as a "first step" and a testing ground before expanding into Brazil, Paraguay, and Argentina. At the time, Tether said it would "soon" expand its mining operations to other countries. 

In June 2025, CEO Paolo Ardoino told The Block's Big Brain podcast that the company would become the "biggest bitcoin miner out there" by the end of the year. At the time, Tether said it had invested more than $2 billion in energy and mining infrastructure across 15 sites in Uruguay, Paraguay, and El Salvador.

UTE disconnected the two Uruguay sites one month later.

Tether has continued investing elsewhere in the region, acquiring a 70% stake in renewable energy producer Adecoagro and later signing an agreement to use the company's surplus electricity for bitcoin mining.

The company has also released an open-source operating system for mining operations, taken an 8.2% stake in mining finance firm Antalpha, and begun developing modular mining systems with Canaan and ACME Swisstech.

Tether's USDT has around $183 billion in circulation, continuing to lead the global stablecoin market. The firm, which is based in El Salvador and employs a few hundred people, also has an investment portfolio it values at about $20 billion, according to Reuters. Most of its more than 100 investments have not been publicly disclosed.

Mining economics under pressure

Another element of the story is the rising challenge of mining Bitcoin in a way that's economically efficient, given high electricity prices, relatively low bitcoin prices, and the opportunity cost of not pivoting to high-performance computing, like AI training and inference, instead. 

Crypto mining specialist Nicolas Ribeiro described the industry in the Reuters report as "extremely dynamic," with operators frequently opening, closing, or relocating sites.

Uruguay's reliable grid and internet infrastructure make it more attractive for AI data centers than for bitcoin mining, Ribeiro told Reuters. Mining depends more heavily on access to cheap electricity, and Uruguay's power costs remain comparatively high.

"Uruguay isn't viable for mining," Ribeiro said.