Tether Halts Operations in Uruguay Due to High Energy Costs

Tether, a leading stablecoin provider, has stopped its large-scale crypto mining operation in Uruguay, attributing the decision to high energy costs and inadequate tariff structures. The company has also laid off most of its personnel in the country after encountering issues with electricity supply.

Key Takeaways

Tether has ceased its $500 million crypto mining venture in Uruguay due to high energy costs.
The company has laid off 30 out of 38 employees in Uruguay as operations halt.
Initial plans included significant investments in infrastructure and renewable energy projects, though only a fraction was spent.
Tether faced supply issues due to unpaid electricity bills, leading to the operational shutdown.
Despite setbacks in Uruguay, Tether is actively pursuing Bitcoin mining projects in Paraguay and El Salvador.

Tether Uruguay

Tether's Operations in Uruguay: The Closure Explained

Tether, a major player in the cryptocurrency market, has decided to shut down its extensive $500 million crypto mining operation in Uruguay. This decision comes in light of soaring energy costs and the absence of suitable tariff frameworks.

According to local news outlet El Observador, Tether has let go of 30 out of its 38 employees in Uruguay. The company has confirmed these layoffs to the Ministry of Labor and Social Security (MTSS) following discussions at the National Directorate of Labor's (Dinatra) headquarters.

After launching sustainable Bitcoin mining operations in May 2023 with the help of a locally licensed company, Tether's CEO, Paolo Ardoino, remarked that Uruguay possessed a robust and reliable electrical grid suited for modern industrial needs.

Tether initially planned to invest a total of $500 million, which included creating three Data Processing Centers in the Florida and Tacuarembó provinces. In addition, they aimed to develop a wind and solar energy park with an expected capacity of 300 megawatts.

However, Tether only committed $100 million to this initiative and planned to allocate another $50 million for building infrastructure. These facilities would ultimately belong to Uruguay’s national electricity provider, UTE, and the National Interconnected System.

Setbacks Leading to Operational Cessation

Tether's operational struggles in Uruguay became apparent in September when the national electricity provider, UTE, cut off power at the end of July due to outstanding bills that amounted to nearly $5 million.

Despite efforts to negotiate long-term electricity agreements through its local subsidiary Microfin, the company could not resolve its debt issues, leading to the closure. "We believe in the country’s potential, but for projects of this magnitude, a stable and competitive tariff structure is crucial. Our inability to finalize an agreement has compelled us to reassess our strategy,” Tether noted in a letter to UTE in September.

Future Plans Amid Challenges

While Tether's retreat from Uruguay raises concerns regarding the sustainability of energy-heavy mining in regions with high costs, the company is still focused on expanding its mining operations in other regions. In July, Tether expressed intentions to control around 1% of the global Bitcoin network, collaborating with a sustainable production firm in South America to pursue BTC mining.

Despite the challenges faced in Uruguay, Tether is looking to establish Bitcoin mining facilities in Paraguay and El Salvador, each with a capacity ranging from 40 to 70 megawatts.