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MONTEVIDEO\/PARIS, Aug 21: Uruguay seemed like the perfect place for cryptocurrency giant Tether to launch a bitcoin mining operation.<\/strong><\/p>\n The company, which has issued nearly two thirds of all stablecoins in circulation, picked this still largely agricultural corner of South America that has in recent years become a hub for global fintech firms, helped by its reputation for political stability and favorable tax conditions.<\/p>\n In 2023, Tether said it would build two mining \u200bsites in Uruguay, part of a spending spree it said would bring economic development, new energy infrastructure and jobs to the country.<\/p>\n But amid a dispute over the amount of energy that would be supplied for its thirsty bitcoin mining, the plans unraveled and the \u200cmining sites were abandoned, a Reuters review of documents and interviews with multiple people reveals. Little was left to show for a project that one person with direct knowledge estimated likely cost around $120 million.<\/p>\n Tether did not respond to requests for comment for this article.<\/p>\n The aborted Uruguay investment offers a rare window into the often opaque operations of Tether, as it seeks to expand and reinvest its vast profits into industries as varied as brain implants and soccer.<\/p>\n It also demonstrates how the basic economics of bitcoin mining \u2014 turning cheap energy into crypto profits \u2014 may no longer be adding up, after crypto prices dropped and as energy prices rise.<\/p>\n Tether\u2019s ability to quickly dip in and out of Uruguay is typical of the \u201chypermobile\u201d nature of bitcoin mining \u200bactivity, which does not tend to create substantial long-term jobs or benefits for the host country, said Pete Howson, an assistant professor at Northumbria University.<\/p>\n \u201cThis plug-and-play infrastructure is very easy to do \u2014 literally pulling the plug and then move it to somewhere else,\u201d he said.<\/p>\n \u2018THE PERFECT PLATFORM\u2019<\/strong><\/p>\n In May \u200b2023, Tether announced the launch of bitcoin mining operations in Uruguay, without disclosing an investment value. It called Uruguay the \u201cperfect platform,\u201d citing its abundant renewable energy and robust grid.<\/p>\n Tether CEO Paolo Ardoino and chairman Giancarlo Devasini are frequent \u2060visitors to Uruguay\u2019s booming beach resort of Punta del Este \u2014 dubbed the Monaco of South America \u2014 where they host private gatherings, industry sources told Reuters, and American billionaire Peter Thiel is building a $10 million residential compound nearby.<\/p>\n At the time, Tether said the plan involved \u201cinvesting resources into energy production,\u201d without providing details.<\/p>\n Bitcoin mining, an energy-intensive \u200bprocess in which computers solve complex computational puzzles to be rewarded in bitcoin, is a core part of Tether\u2019s investment plans. Ardoino told an industry conference last year the company has invested more than $2 billion in energy production and bitcoin mining.<\/p>\n A former Tether contractor who spoke to Reuters on condition of anonymity because they \u200bare not allowed to speak to the media said Uruguay had been intended as a \u201cfirst step\u201d for Tether\u2019s bitcoin mining plans across South America.<\/p>\n Tether invested roughly $60 million in each of two mining sites in the department of Florida, totaling roughly $120 million, the former contractor said, citing their own assessments of how much the company had spent.<\/p>\n The project, a sizable deal for a country where annual foreign direct investment is around $2 billion, was aimed at using Uruguay as a testing ground before moving to bigger markets such as Brazil, Paraguay and Argentina, the person said. Tether has since announced investments in bitcoin mining and platforms in Brazil.<\/p>\n Based in El Salvador with just a few hundred employees globally, Tether controls around $183 billion-worth of stablecoin. Some \u200bpolicymakers worry that stablecoins, a type of cryptocurrency pegged to official currencies, risk endangering financial stability by increasing the linkages between crypto and mainstream finance.<\/p>\n Tether says its stablecoin is backed by an equivalent amount in real-world assets. Those assets have made it a top 20 holder of U.S. Treasuries \u2014 earning the company billions in \u200bprofits now used to build a portfolio of investments it says is worth around $20 billion.<\/p>\n Most of those 100-plus investments are not disclosed, but those it has include data centers, video-sharing platform Rumble, which hosts U.S. President Donald Trump\u2019s Truth Social, and a brain-chip implants business, plus a stake in Italy\u2019s Juventus football club.<\/p>\n SUPPLY DISAGREEMENT<\/strong><\/p>\n A promotional video posted by \u200cTether on X in \u2060February 2024 of its nascent Uruguay operations showed rows of small buildings, with fans on top and computing hardware inside. Farmland surrounds the site, characteristic of the rural department of Florida, with wind turbines in the background.<\/p>\n Road signs around the buildings play on crypto jargon, such as \u201cMemepool Avenue\u201d and \u201cHalving Street\u201d, according to the video, which was verified by Reuters. Then the project began to unravel over a fundamental disagreement about electricity supply with state utility UTE, the two former contractors and a source at UTE said.<\/p>\n Tether believed a clause in its contract with UTE represented a minimum level of power supply that could later be increased \u2014 but UTE viewed the contracted amount as a maximum allocation that could not be exceeded, one of the former contractors said.<\/p>\n Sources at UTE also said the disagreement was over how much electricity Tether\u2019s local legal entity Microfin was entitled to.<\/p>\n The dispute had begun by November 2024, according \u200bto an internal briefing UTE compiled in 2025 for its own staff \u200bthat Reuters reviewed.<\/p>\n Insufficient power was a serious problem. As demand at the \u2060mining plants rose, Tether was short of supply, leaving the site without sufficient electricity for days at a time, the former contractor said.<\/p>\n Tether and Microfin did not respond to requests for comment on the UTE contract.<\/p>\n The first ex-contractor and a third source said the dispute had been compounded by a shift in Uruguay\u2019s political landscape. A left\u2011leaning government took office in March 2025 and appointed new directors at UTE. The firm took a harder line on allowing Tether to renegotiate \u200bthe energy supply contract, the contractor said.<\/p>\n Two months after the new government took office, Microfin stopped paying its electricity bills and then told UTE in June 2025 it would terminate its contracts, the UTE document shows.<\/p>\n Both sides \u200bsought to salvage the deal by agreeing to \u2060a revised contract, the UTE briefing notes show. The utility\u2019s board approved a memorandum of understanding and revised contract texts, but Tether representatives did not attend the signing, according to the minutes in the briefing. Tether told Uruguay\u2019s labor authorities on November 25 that it would cease operations and lay off most staff, local newspaper El Observador reported.<\/p>\n Microfin settled its outstanding debts in December, UTE told Reuters.<\/p>\n SWITCH TO AI<\/strong><\/p>\n The Uruguayan deal collapsed as Tether has sought to position bitcoin mining as a key part of its global investment portfolio.<\/p>\n But bitcoin mining has become less profitable, \u2060analysts say, hit by \u200ba pre-programmed reduction in the bitcoin rewards available \u2014 called the \u201chalving\u201d \u2014 in April 2024, as well as a sharp drop in bitcoin\u2019s price from a peak in 2025.<\/p>\n To stay afloat, bitcoin miners have \u200btried strategies including buying more efficient hardware, seeking cheaper energy, or using their computer power for AI and high-performance computing instead, said Tanay Ved, senior research analyst at Talos.<\/p>\n Crypto mining expert Nicolas Ribeiro described the industry as \u201cextremely dynamic,\u201d with operators opening, closing and relocating constantly.<\/p>\n Uruguay\u2019s strengths \u2014 a reliable power grid and strong internet connectivity \u2014 are better suited to data centers for AI because mining hinges \u200balmost entirely on access to cheap electricity, Ribeiro added. Uruguay is a leader in renewable energy, but its power costs are relatively high.<\/p>\n \u201cUruguay isn\u2019t viable for mining \u2014 that\u2019s the reality,\u201d he said.<\/p>\n<\/div>\n
Initially well run, the site\u2019s operations generated income, the two former Tether contractors said.<\/p>\n
With the memorandum unsigned and unpaid bills, UTE cut power to the mining sites on July 25, according to the UTE document.<\/p>\n