Tether's $120 Million Bitcoin Mining Project in Uruguay Collapses Amid Energy Dispute

Tether's major bitcoin mining initiative in Uruguay has been abandoned following a contract dispute over energy supply, according to a Reuters review of documents and interviews. The project, which a former contractor estimated cost around $120 million, highlights the operational risks and shifting economics facing the crypto mining industry.

Disagreement Over Power Supply

The collapse of the project stemmed from a fundamental disagreement with Uruguay's state utility company, UTE. According to former contractors and a source at the utility, Tether believed its contract guaranteed a minimum level of power that could be increased as needed for its energy-intensive mining operations.

However, UTE reportedly viewed the contracted amount as a maximum allocation that could not be exceeded. This discrepancy led to power shortages at the mining sites, which in turn resulted in unpaid electricity bills. After a failed attempt to renegotiate, UTE cut power to the facilities on July 25, 2025, according to an internal utility document reviewed by Reuters. Tether's local entity, Microfin, ceased operations in November 2025 and settled its outstanding debts the following month.

A Look into Tether's Strategy

The aborted investment offers a rare glimpse into the opaque diversification strategy of Tether, which issues the world's largest stablecoin and controls assets worth around $183 billion. The company has been reinvesting billions in profits into a wide range of industries, from energy production and data centers to brain-implant technology.

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Uruguay was initially touted as the "perfect platform" for Tether's mining ambitions in May 2023, citing the country's political stability and abundant renewable energy. A former contractor told Reuters the Uruguayan sites were intended as a "first step" and a testing ground for a broader expansion across South America.

Shifting Economics of Crypto Mining

The incident also underscores the challenging environment for bitcoin miners globally. The industry's profitability has been squeezed by several factors:

• The April 2024 "halving", a pre-programmed event that cut the rewards for mining new blocks in half.
• Volatile bitcoin prices, which have fallen from previous peaks.
• Rising global energy costs.

Analysts note that the bitcoin mining industry is "hypermobile," with operators frequently relocating to find the cheapest sources of power. While Uruguay is a leader in renewable energy, its relatively high electricity costs make it less viable for mining compared to other applications like AI data centers, according to industry experts.