Tether is shutting down its Bitcoin mining operations in Uruguay less than two years after announcing a $500mn investment plan, following a breakdown in negotiations with the state-owned utility over energy tariffs.
Tether Abandons Uruguay Mining Hub After Energy Talks Fail
1 December 2025 - 17:00 CET
By Stu Clelland
The stablecoin issuer has begun laying off 30 of its 38 local staff and winding down the facility, according to confirmed reports from local outlet El Observador and filings with the Ministry of Labor.
The dispute
The retreat stems from a protracted dispute with UTE, Uruguay's state power company. Tether had reportedly sought to switch its grid connection from a standard 31.5 kV transmission line to a high-voltage 150 kV line, which would have significantly lowered its per-unit energy costs.
When UTE refused to grant the preferential rate structure, the economics of the operation collapsed.
The friction peaked earlier this year when UTE briefly cut power to the facility over alleged unpaid bills totalling $4.8mn. While Tether denied reports of an exit at the time, asserting it was "committed to the region," the failure to secure a long-term power purchase agreement (PPA) has now forced a capitulation.
Sunk costs
The exit is a rare stumbling block for Tether’s infrastructure division. The company had earmarked $500mn to build three data centers and a 300 MW renewable energy park in the country.
Industry estimates suggest Tether had already deployed approximately $100mn into the project, with another $50mn allocated for grid infrastructure upgrades that were intended to be transferred to the state.
Regional competition
The closure highlights the geographic fragility of industrial-scale Bitcoin mining. While Uruguay boasts 98% renewable energy generation, a key selling point for Tether’s "sustainable mining" narrative, its industrial energy rates remain uncompetitive compared to rival jurisdictions like Paraguay or Ethiopia, where miners are currently flocking.
Tether retains massive mining exposure elsewhere, including investments in El Salvador’s "Volcano Energy" project and Northern Data in Germany.
Why Tether Walked Away
The economics of industrial mining are dictated by a single metric: cost per kilowatt-hour (kWh). Tether’s exit stems from Uruguay’s inability to compete with its neighbors.
Jurisdiction Avg. Industrial Rate (kWh) Source
Paraguay $0.03 - $0.05 Itaipu Dam surplus (ANDE)
Ethiopia $0.03 - $0.04 Grand Ethiopian Renaissance Dam
Uruguay $0.08 - $0.16 *UTE Commercial/Industrial
*Note: Tether sought a high-voltage connection to lower this rate towards $0.06 but failed to secure the contract.
