Tether pulls the plug: Bitcoin mining stopped in Uruguay due to high energy costs!

Tether pulls the plug: Bitcoin mining stopped in Uruguay due to high energy costs!

Tether has officially announced that it will suspend its Bitcoin mining operations in Uruguay, citing high energy prices in the country. In a meeting with the Uruguayan Ministry of Labor and Social Security, the company informed about the dismissal of 30 of the total 38 employees, while only a small team will be retained for the remaining tasks. Tether has derived significant investments in the region in recent years, which are now being questioned against the backdrop of unsustainable operating costs.

Electricity tariffs in Uruguay range from $60 to $180 per megawatt hour for commercial and industrial users. These pricing structures have proven to be uncompetitive for large-scale mining. In 2023, Tether announced investments of up to $500 million to operate and build three data processing centers and a 300 megawatt renewable energy park. Of this, over $100 million has already been spent, while another $50 million was earmarked for the handover of infrastructure to the Uruguayan electricity supplier UTE.

Renewable energies and strategic realignment

Despite the setbacks in Uruguay, Tether continues its expansion plans. Bitcoin mining operations have been plagued by energy cost issues from the start. Back in November 2023, the company began negotiations with UTE to obtain more competitive tariffs, but the proposed requests to adjust electricity prices and revise the energy purchase agreement were rejected. Tether warned UTE that developing predictable and competitive tariffs for large-scale projects is crucial.

In addition, there were difficulties with partners in the region: in June 2024, Tether's local partner began missing payments. Shortly thereafter, in July 2024, UTE cut off power to two Tether-related facilities after the company's total debt rose to approximately $5 million. In September 2024, amid a period of unstable financial conditions, local media predicted that Tether would scale back its operations in Uruguay, something the company initially denied.

Future prospects in cheaper markets

Despite the closure of Uruguayan operations, Tether remains optimistic and planned to invest in alternative jurisdictions with favorable environments for crypto operations. In 2023, the headquarters moved to El Salvador, a country with pro-Bitcoin policies and favorable cryptocurrency regulations. Additionally, Tether signed a memorandum of understanding with Adecoagro for a renewable energy-based Bitcoin mining project in Brazil to expand its international presence.

To strengthen its presence in Latin America, Tether also acquired digital asset custody platform Parfin. This commitment shows that Tether continues to work on innovative strategies while addressing challenges in existing operations.