Coinspeaker
3 hours ago
Bearish

Tether abandons $120M Uruguay bitcoin mining project after power dispute with UTE

3 min

Tether halted a roughly $120 million Bitcoin mining buildout in Uruguay after a contract dispute with state utility UTE over electricity allocation. Reuters reported the disagreement centered on whether the contract’s power figure was a scalable minimum or a hard cap. As demand grew, the sites faced multi-day power shortfalls. The dispute, which traces to at least November 2024 per internal UTE documents, led to shutdowns and layoffs despite initial operations generating revenue.

Key facts

  • Scope: Two mining sites in Florida Department, operated by local entity Microfin. Tether presented Uruguay as attractive due to renewable energy, grid reliability, political stability, and tax treatment.
  • Contract interpretation: Tether and a former contractor viewed the contracted electricity amount as a baseline that could scale with expansion. UTE treated it as a maximum allocation requiring a new agreement for increases, according to a former contractor and a UTE source.
  • Timeline: Dispute visible by Nov 2024. A new leftist government in March 2025 appointed UTE leadership that took a stricter stance. Microfin stopped paying power bills in May 2025 and notified UTE of contract termination in June. UTE approved an MoU and draft new contract, but Tether representatives did not attend for signing. UTE cut power on July 25, 2025. Tether notified authorities in Nov 2025 of halted operations and layoffs. Microfin repaid outstanding debt in Dec 2025.
  • Financial scale: A former contractor estimated Tether’s investment at about $120 million. Tether’s broader energy and mining investments exceed $2 billion, according to CEO Paolo Ardoino.

Implications

  • Power risk: Cheap power does not equal guaranteed power. Contract clarity on supply guarantees and scalability is critical when demand ramps.
  • Policy sensitivity: Government changes can reset utility negotiations and enforcement, affecting mining uptime and expansion plans.
  • Mining economics: Post-April 2024 halving, miners increasingly rely on efficient hardware, lower-cost energy, and diversification into AI and high-performance computing to support margins, according to Talos senior analyst Tanay Ved.
  • Use-case fit: Analyst Nicolas Ribeiro noted Uruguay’s grid reliability and connectivity align with AI data centers more than Bitcoin mining, where profitability hinges on sustained cheap electricity access.