Tether’s $120 million Uruguay Bitcoin mining project collapses after power dispute

Tether shuts down Uruguay Bitcoin mining sites after power dispute

Tether, the company behind the popular stablecoin USDT, has abandoned a $120 million Bitcoin mining project in Uruguay. The collapse followed a dispute with the country’s state-owned power utility, UTE, over a power supply contract. UTE cut electricity to Tether’s mining sites in July 2025, and Tether later laid off most of its staff in Uruguay.

The project was part of Tether’s plan to expand Bitcoin mining in South America. Uruguay was chosen for its renewable energy and stable electricity grid. However, disagreements over how much power Tether could use led to the project’s failure.

What went wrong with the project

• Tether and UTE disagreed on the power supply terms. Tether believed the agreed amount was a minimum that could be increased, while UTE saw it as a fixed limit.
• As the mining sites grew, they sometimes lacked enough power for days at a time.
• Tether’s local team missed a key meeting to sign a revised contract and stopped paying electricity bills.
• UTE cut power to the sites on July 25, 2025, after bills went unpaid.
• Tether notified Uruguay’s labor authorities in November 2025 that it would end operations and lay off workers.

Why the dispute escalated

Sources told Reuters that the election of Uruguay’s new left-leaning government in March 2025 played a role. The new leadership appointed different directors to UTE, who took a stricter stance in contract negotiations. Tether’s local entity, Microfin, stopped paying electricity bills two months after the government change.

A former contractor said Tether viewed Uruguay as a “first step” before expanding into Brazil, Paraguay, and Argentina. However, the project never progressed beyond the two sites in Uruguay’s Florida department.

Tether’s broader mining plans

Despite the Uruguay failure, Tether has continued investing in mining and energy projects elsewhere. The company has:

• Bought a 70% stake in renewable energy producer Adecoagro and signed a deal to use its surplus electricity for mining.
• Released an open-source operating system for mining operations.
• Taken an 8.2% stake in mining finance firm Antalpha.
• Partnered with Canaan and ACME Swisstech to develop modular mining systems.

Tether’s CEO, Paolo Ardoino, had previously said the company aimed to become the “biggest Bitcoin miner” by the end of 2025. At the time, Tether claimed to have invested over $2 billion in energy and mining infrastructure across 15 sites in Uruguay, Paraguay, and El Salvador.

What is confirmed about the project

• Tether spent around $120 million on the Uruguay project, though the company never publicly confirmed this amount.
• UTE cut power to the mining sites in July 2025 after Tether stopped paying bills.
• Tether laid off most of its Uruguay staff in November 2025.
• The dispute centered on differing interpretations of the power supply contract.

What remains unclear

• Tether has not commented on the project’s collapse or the reported $120 million investment.
• It is unclear whether Tether will attempt to revive the project or shift focus to other countries.
• The exact role of Uruguay’s new government in the dispute is not fully confirmed, though sources suggest it influenced UTE’s harder stance.

Why this matters for Bitcoin mining

The collapse highlights the challenges of large-scale Bitcoin mining, especially when relying on government-run utilities. Mining requires a steady and affordable power supply, and disputes over contracts can quickly shut down operations.

Uruguay’s reliable grid and renewable energy made it attractive for mining, but high electricity costs compared to other countries may have made the project unsustainable. Industry experts quoted by Reuters said Uruguay is better suited for AI data centers than Bitcoin mining.

Sources

• The Block
• Reuters