Crypto Mining Faces Energy Cost Challenges as Tether Withdraws from Uruguay

Tether Suspends Bitcoin Mining in Uruguay Amid Rising Energy Costs

Tether, the company behind the world's largest stablecoin USDT, has decided to stop its Bitcoin mining activities in Uruguay. This decision comes as a result of increasing electricity expenses and unresolved disagreements over energy tariffs, effectively ending what was once a $500 million infrastructure initiative. The shutdown, which led to the dismissal of 30 staff members, was confirmed after discussions with Uruguay's Ministry of Labor and Social Security. This development highlights the significant obstacles faced by cryptocurrency mining operations in Latin America, where regulatory frameworks and pricing often conflict with the needs of large-scale projects.

Ambitious Beginnings and Renewable Energy Focus

Launched in May 2023, Tether's Uruguay project was initially celebrated as a blueprint for sustainable crypto mining, utilizing the country's robust renewable energy network. CEO Paolo Ardoino had commended Uruguay's reliable power grid and modern capabilities, envisioning a 300 MW renewable energy facility and three data centers that would require 165 MW of electricity.

Financial Challenges and Regulatory Roadblocks

Despite its promising start, the venture soon faced mounting financial difficulties. Soaring electricity rates, especially the 31.5 kV tariff imposed at Tether's Florida location, made the operation economically unfeasible. Tether sought to negotiate lower tariffs, including a switch to 150 kV rates, but these requests were not approved by national energy regulators.

Accumulated unpaid electricity bills, which reached nearly $5 million, prompted Uruguay's National Administration of Power Plants and Electrical Transmissions (UTE) to disconnect power to Tether's sites in July 2025, hastening the project's downfall. Tether's local branch, Microfin, attempted to negotiate a settlement, but the inability to resolve outstanding debts left the company with no sustainable options. Tether attributed its withdrawal to broader systemic challenges, stressing the importance of stable tariffs and regulatory adaptability for large-scale mining operations.

Regional Shifts and Future Plans

This exit from Uruguay reflects a larger trend across Latin America, where energy authorities are tightening pricing policies to protect the national grid. Tether's experience is similar to that of other crypto miners, many of whom are relocating to countries with lower energy costs and more favorable regulations. Tether has already revealed intentions to grow its presence in Paraguay and El Salvador, targeting new mining sites with capacities ranging from 40 to 70 megawatts. These initiatives are part of the company's broader strategy to diversify energy sources while maintaining a focus on renewable-powered mining.

Economic Realities and Industry Implications

Industry analysts point out that Tether's departure from Uruguay underscores the fragile economics of crypto mining in regions with high operational costs. The company had invested about $100 million in the project's early stages and set aside an additional $50 million for infrastructure that was to be transferred to UTE. Nevertheless, the business model collapsed under the strain of rising tariffs and inflexible regulations. Local specialists believe that adopting 150 kV tariffs could have lowered expenses and better matched Tether's scale, but stalled negotiations left the project exposed to external pressures.

Looking Ahead

Tether has expressed caution regarding any future involvement in Uruguay, indicating it will observe regulatory changes before considering a return. For now, the company is focusing on markets where energy prices are lower and regulatory guidelines are clearer, providing a more stable environment for large-scale investments. This strategic shift highlights the critical role of energy economics in determining the future of global crypto mining, as companies seek out regions with abundant resources and supportive policies to offset the high costs of digital asset production.