Tether Stands Firm: Denies Halting Bitcoin Mining Operations in Uruguay

Tether, the issuer of the world’s largest stablecoin, has dismissed recent reports by local Uruguayan media alleging a complete cessation of its Bitcoin (BTC) mining activities in the country. Instead, the company reaffirmed its dedication to resolving ongoing disputes over electricity pricing with Uruguay’s government while maintaining its focus on continued operations and expansion across Latin America.

In a statement released to Cointelegraph on October 22, Tether clarified, “The reports from local media stating that we have withdrawn from Uruguay are inaccurate. We are engaging with local operators and government officials to settle conflicts regarding electricity rates.” This assertion underscores the company’s steadfast involvement in negotiations aimed at securing a sustainable framework for its mining initiatives in the region.

Addressing Reports of Unpaid Bills and Mining Withdrawal

Recent coverage from Uruguayan media claimed that the state-run electricity provider, UTE, had suspended power to Tether’s mining facilities due to outstanding debts amounting to $2 million as of May. Additionally, these reports suggested that Tether owed a total of $4.8 million when combining liabilities from other projects. Allegations also surfaced that Tether had abandoned its mining operations in Uruguay and terminated future investment plans.

Tether strongly refuted these claims, labeling the reports as mischaracterizations of its situation. In the same statement to Cointelegraph, the company emphasized its proactive approach, stating, “We continue to evaluate optimal solutions for operations in Uruguay and across the Latin American region. Some of the reports do not accurately reflect our circumstances.” Furthermore, Tether highlighted that local mining site operators remain actively engaged in conversations with government officials. “Tether supports constructive resolutions and the creation of long-term opportunities,” the company asserted, emphasizing its commitment to sustainable growth in Uruguay and beyond.

The Challenge of High Electricity Costs in Uruguay's Mining Industry

The feasibility of operating energy-intensive cryptocurrency mining facilities in Uruguay has long been hindered by the country’s high electricity costs. Tether initially announced plans in November 2023 to launch Bitcoin mining operations in Uruguay, with projected investments potentially reaching $500 million. Yet, electricity rates in the country—spanning between $60 and $180 per megawatt-hour (MWh)—pose a significant challenge compared to Paraguay, where electricity costs remain significantly lower at approximately $22 per MWh.

This discrepancy in energy costs has created headwinds for the crypto mining industry in Uruguay. Back in 2018, Vici Mining, a prominent South American mining company, relocated its operations from Uruguay to Paraguay, citing the prohibitive energy prices in the former market. Engineer Nicolás Ribeiro, representing Vici Mining, explained to local outlet Telemundo, “In the mining industry, energy accounts for 80% of operating costs. Uruguay's elevated electricity prices pose a substantial burden for both new investors and existing players.”

Ribeiro also addressed the broader implications of Uruguay’s current economic model, describing Tether’s struggles as a stark “policy warning signal for attracting and sustaining energy-intensive industries” like cryptocurrency mining, which requires affordable and reliable power sources to remain viable.

Strategic Focus on Paraguay and Latin American Market Expansion

Despite ongoing discussions in Uruguay, Tether continues its mining operations in Paraguay, a country distinguished by its highly competitive electricity costs. This strategic diversification signals Tether’s ability to adapt within the region while capitalizing on Paraguay’s more favorable energy pricing to bolster its Bitcoin mining efforts.

Latin America as a whole has emerged as a particularly lucrative market for cryptocurrency and stablecoin adoption. Driven by economic instability and demand for reliable financial alternatives, stablecoins like Tether are rapidly gaining traction among consumers and businesses alike. Tether’s commitment to expanding its operations mirrors this growing demand, positioning the company to leverage long-term opportunities within the region.

Tether reiterated its pledge to overcoming operational challenges and navigating pricing negotiations with Uruguay’s UTE electricity provider. Through its combined efforts across Latin America, Tether aims to fortify its position in the cryptocurrency ecosystem while addressing concerns over cost structures that could affect future investment and expansion plans.