Tether to Cease Operations in Uruguay Due to High Energy Costs
Tether, the issuer of the popular stablecoin USDT, has reportedly confirmed its intention to shut down its operations in Uruguay. According to local media, the company informed Uruguay’s Ministry of Labor and Social Security about its decision during a meeting at the National Directorate of Labor headquarters.
As a result, Tether has laid off 30 of its 38-member team in Uruguay, leaving only a skeleton crew behind. The decision to cease operations in the country is primarily due to the high electricity costs, which have made the company’s energy-intensive Bitcoin mining business unsustainable. Uruguay’s electricity tariffs for commercial and industrial users can range between $60 and $180 per megawatt-hour, depending on time and location.
Reasons Behind the Decision
Tether’s decision to pull out of Uruguay stems from the country’s high energy costs, which have significantly undermined the economic feasibility of its operations. The company had initially projected investments of up to $500 million to sustain operations and support the construction of three data processing centers and a renewable energy park with 300 megawatts of capacity. However, problems with energy costs began almost immediately after the launch, and by November 2023, Tether initiated negotiations with UTE, the country’s state-owned power provider, regarding more competitive rates.
Despite efforts to renegotiate the energy purchase contract, Tether’s proposals were ultimately rejected. The company had also issued a formal warning to the agency, stating that predictable and competitive tariffs were essential for projects of this magnitude. Subsequently, in June this year, Tether’s local partner reportedly began defaulting on payments, and the following month, UTE cut power supply to two Tether-related facilities after the company’s total outstanding debt reached roughly $5 million.
Expansion Plans Continue
While Tether is ceasing operations in Uruguay, the company continues to expand its global footprint through acquisitions, strategic partnerships, and infrastructure investments in more favorable jurisdictions. Earlier this year, Tether relocated its headquarters to El Salvador due to the country’s pro-Bitcoin policies and crypto-friendly regulations. The company also signed a memorandum of understanding with Adecoagro to power a renewable energy-driven Bitcoin mining initiative in Brazil.
More recently, Tether acquired the Latin America-based digital asset custody platform Parfin, a move aimed at deepening its institutional presence in the region and bridging traditional finance with blockchain infrastructure. As the company continues to navigate the challenges of the cryptocurrency market, it remains committed to expanding its operations in regions with more favorable regulatory environments.
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