Operational Challenges and Investment Scaleback
Global cryptocurrency firm Tether has confirmed it is stopping its bitcoin mining operations in Uruguay, citing high electricity costs and an uncompetitive tariff structure. The move affects 30 of its 38 local employees as the company scales back its planned $500 million investment. The company also indicated that the uncertainty around long-term energy pricing has made it difficult to plan future expansions reliably.
Tether is ending its cryptocurrency mining operations in Uruguay, laying off 30 of its 38 local employees. The company invested $100 million out of a planned $500 million, including data centers and a renewable energy park. High electricity costs and uncompetitive tariffs forced the halt, though Tether is exploring ways to maintain a presence in Uruguay despite these operational challenges.
Investment Plans and Operational Difficulties
The firm had aimed to build three data centers in Florida and Tacuarembó and develop a wind and solar generation park with a 300-megawatt capacity. By the time operations became unfeasible, Tether had spent about $100 million and allocated an additional $50 million for infrastructure to be transferred to UTE, the national electricity provider.
Rising energy costs, including 31.5 kV toll fees, made the project economically unviable. Several proposals, such as switching to 150 kV tolls and revising power purchase agreements, were considered but did not lead to an agreement. Analysts noted these adjustments could have reduced costs and prevented unnecessary infrastructure construction. Additionally, Tether highlighted the challenge of aligning renewable energy schedules with mining demands, which added operational complexity.
Exploring Options for Continued Presence in Uruguay
Although electricity was cut off due to unpaid bills totaling $4.8 million, Tether denied that debt alone prompted the exit. The company stated it is still evaluating ways to operate in Uruguay and the broader South American market. Its local subsidiary has been negotiating with government officials to address financial and operational issues, emphasizing long-term interest in sustainable projects. Discussions reportedly include potential partnerships with local energy providers to secure more predictable pricing.
Impact on Local Workforce and Future Prospects
The shutdown directly affects Uruguay’s workforce, with 30 employees formally notified of termination during a November 25 meeting at the National Directorate of Labor (Dinatra). Tether launched operations in May 2023, noting Uruguay’s reliable electrical grid as a factor in its initial investment.
While large-scale mining operations are now on hold, Tether continues to assess opportunities in the region. The company emphasized finding solutions that balance operational feasibility with local energy infrastructure constraints and is reportedly exploring smaller-scale pilot projects that could resume operations under more favorable conditions.