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Stablecoin issuer Tether has refuted recent media reports claiming that it has abandoned a $500 million cryptocurrency mining project in Uruguay. The rumors surfaced after a local electricity provider allegedly cut power to Tether’s mining facilities over unpaid bills, sparking speculation about the company’s plans in the region. Tether emphasized that reports suggesting an exit are inaccurate and that the local operator is actively engaging with authorities to resolve the dispute.
Local Media Reports Spark Concerns
According to Telemundo and other Uruguayan media outlets, Tether allegedly shut down its crypto mining operations following a $2 million electricity bill for May that went unpaid to the state-owned National Administration of Power Plants and Electric Transmissions (UTE).
The reports also suggested that Tether owed an additional $2.8 million for other projects in the country, bringing the total debt to approximately $4.8 million. Local media cited Busqueda as the initial source of the story.
Tether, however, clarified that while the debt exists, it does not reflect a decision to abandon operations in Uruguay. “We continue to evaluate the best way forward in Uruguay and the region more broadly,” the company said. Tether stressed its ongoing support for constructive discussions between the local mining operator and the government to resolve the outstanding issues.
Tether’s Regional Commitment
Tether highlighted that it remains committed to long-term opportunities in Latin America, despite the current financial friction. The company first announced plans to establish mining operations in Uruguay in November 2023, with investments potentially reaching $500 million.
While the recent reports suggested a full exit, Tether reassured investors and the public that it is exploring sustainable ways to maintain operations in the country. The company also did not comment on local electricity rates but noted that discussions with UTE continue regarding operational improvements.
High Electricity Costs Pose Challenges
Uruguay’s relatively high electricity costs are a notable factor for energy-intensive operations like crypto mining. Prices in the country range from approximately $60 to $180 per megawatt hour (MWh), significantly higher than neighboring Paraguay, where electricity can be produced for around $22 per MWh thanks to the Itaipu hydropower plant.
Industry experts note that electricity often accounts for more than 80% of mining operational costs, making pricing a critical consideration when deciding where to operate. Nicolás Ribeiro, an engineer with South American Bitcoin mining firm Vici Mining, emphasized that the Tether dispute highlights broader challenges for energy-intensive industries in Uruguay. Vici Mining previously relocated from Uruguay to Paraguay in 2018 to take advantage of cheaper power.
Tether Negotiates New Facilities
According to local reports, Tether has requested a new facility with potentially reduced electricity rates. While the company has not commented on these negotiations, it underscores Tether’s commitment to maintaining operations in the region. The dispute, while notable, is being handled as part of normal operational adjustments rather than a full exit.
Stablecoin Adoption Rises in LATAM
Tether’s involvement in Uruguay comes amid broader adoption of its USDT stablecoin across Latin America. Companies in countries with weak local currencies, such as Bolivia and Colombia, are increasingly using USDT to preserve value and facilitate transactions.
For example, automakers Toyota, Yamaha, and BYD recently began accepting USDT for payments in Bolivia, providing an alternative as the nation faces a shortage of U.S. dollars. Similarly, in Colombia, MoneyGram’s crypto payment app is enabling residents to hold funds in USDT, safeguarding savings against local currency depreciation.
These developments illustrate Tether’s growing influence in the region, reinforcing its strategy of long-term engagement rather than abrupt withdrawal from local markets.
Looking Ahead
Tether’s denial of an exit from Uruguay reflects a cautious yet strategic approach to expanding its mining and operational footprint in Latin America. The company is navigating financial, regulatory, and operational challenges while positioning itself as a stablecoin and mining leader in the region.
Analysts suggest that Tether’s ability to negotiate electricity costs and secure government cooperation will be critical for sustaining operations and realizing the projected $500 million investment. Despite the challenges, the company’s long-term commitment indicates that Tether sees significant opportunity in the region’s growing crypto ecosystem.
As adoption of digital assets continues to rise across Latin America, Tether’s initiatives may serve as a blueprint for other crypto firms looking to balance operational costs with regional growth ambitions.
