Tether's $120 Million Uruguayan Mining Project Crumbles Amid Supply Dispute
Tether, the company behind nearly two-thirds of all stablecoins in circulation, had ambitious plans to launch bitcoin mining operations in Uruguay. The company invested an estimated $120 million into two mining sites in the department of Florida, hoping to use the country as a testing ground before expanding to larger markets in South America.
The project was part of Tether's spending spree, which also included investments in energy production and other industries. However, the plans unraveled over a dispute with state utility UTE regarding electricity supply. Tether believed it had a minimum level of power supply, while UTE viewed it as a maximum allocation.
The disagreement led to insufficient power at the mining sites, leaving them without sufficient electricity for days at a time. The dispute was compounded by a shift in Uruguay's political landscape, with a new left-leaning government taking office and appointing new directors at UTE who took a harder line on renegotiating the energy supply contract.
Tether eventually ceased operations and laid off most staff, citing the inability to reach an agreement with UTE. The collapse of the Uruguayan deal comes as bitcoin mining becomes less profitable due to a pre-programmed reduction in bitcoin rewards and a sharp drop in bitcoin's price.