Tether insists it is not withdrawing from Uruguay following a $4.8 million debt dispute with state-owned electricity company UTE.
Tether has denied widespread local media reports that the company is withdrawing from Uruguay following a $4.8 million debt dispute with the National Electricity Transmission and Power Plant Authority. In a comment to Cointelegraph on Monday, the world’s largest stablecoin issuer said it “continues to evaluate the best course of action in Uruguay and the wider region,” adding that reports of its withdrawal “do not reflect the situation.”
According to Telemundo , UTE cut off the power to Tether 's mining facility because the company failed to pay its $2 million electricity bill for May. The total debt reportedly totaled $4.8 million, including $2.8 million owed to other local projects, not including penalties and surcharges. Tether announced plans to mine crypto assets in Uruguay in November 2023, with local reports estimating the Capital could reach $500 million.
Tether acknowledged the debt issues, but stressed that the local company operating the mining facility is engaged in “ongoing discussions with the government to resolve any remaining issues.” The company affirmed that it “continues to support these efforts and the path of constructive cooperation, reflecting a long-term commitment to sustainable opportunities in the region.”
The challenge of electricity costs and the shift trend
While Tether has denied pulling out, local reports have suggested that high electricity costs are the main reason for the shutdown. In Uruguay, electricity prices range from $60 to $180 per megawatt-hour, significantly higher than in neighboring Paraguay, where prices are around $22 per megawatt-hour thanks to the Itaipu hydroelectric plant. Tether also operates a Bitcoin mining facility in Paraguay, taking advantage of low energy costs.
Uruguay is not the first to lose crypto miners due to cost. In 2018, South American Bitcoin mining company Vici Mining moved its operations from Uruguay to Paraguay. “If you look at the global Medium electricity prices, Uruguay is much higher. In this industry, where 80% of the operating costs are electricity, this factor is decisive,” said Vici engineer Nicolás Ribeiro.
Ribeiro sees the Tether dispute as a “warning sign” for policymakers about the challenge of attracting and maintaining a large energy-consuming industry. Meanwhile, stablecoin adoption is growing in Latin America, with Toyota, Yamaha, and BYD starting to accept Tether in Bolivia to address a dollar shortage, and MoneyGram launching a crypto-asset payments app in Colombia amid a weakening peso.
