Tether Scales Back Uruguay Mining Ambitions as Energy Costs Rise & Rating Tensions Grow

Tether’s long-planned expansion into large-scale Bitcoin mining in Uruguay has come to an abrupt stop, bringing an end to an ambitious $500 million infrastructure plan that had been touted as a major step forward for the company’s energy strategy. 

The stablecoin issuer has confirmed that it is shutting down its mining operations in the country and laying off most of its local workforce, citing unsustainable electricity prices and the lack of a competitive tariff structure.

The move became public after a meeting at the National Directorate of Labor (Dinatra), where representatives of the Ministry of Labor and Social Security were informed that 30 out of Tether’s 38 employees in Uruguay would be dismissed. Local outlet El Observador later reported the details, fueling a national discussion about whether Uruguay’s regulatory framework can realistically support energy-intensive digital infrastructure.

Tether had launched the mining initiative in May 2023, partnering with a licensed local operator. At the time, CEO Paolo Ardoino highlighted his confidence in the country’s energy capabilities, stating that Uruguay “has a robust and reliable electrical grid capable of meeting the demands of modern industries.” That optimism, however, quickly collided with rising costs and unresolved contract disputes.

The company initially intended to invest $500 million to build three data centers in the provinces of Florida and Tacuarembó, along with a renewable wind-and-solar power park with a planned capacity of 300 megawatts. But only around $100 million was actually spent. 

Another $50 million was set aside for infrastructure that would ultimately be transferred to UTE, the national electricity provider, and the National Interconnected System. As the financial pressures grew, Tether stopped allocating additional capital.

By late July, UTE cut the electricity supply to Tether’s mining facilities after unpaid bills accumulated to nearly $5 million. A user on X summarized the situation bluntly, saying “they didn’t have the money to pay UTE the $5 million in arrears.” Tether’s local subsidiary, Microfin, had tried to negotiate long-term electricity agreements, but the outstanding debt prevented progress.

In a letter sent to UTE in September, the company wrote: “We believe in the country’s potential, but for projects of this scale, a competitive and predictable tariff framework is essential. The failure to reach an agreement forces us to rethink our strategy.” Months of negotiations followed, but no breakthrough came, and the mining operations never recovered.

Despite the shutdown, Tether says it has not abandoned the country. The company maintains that it is reassessing how to move forward in Uruguay and the broader Latin American region, suggesting the door remains open for future involvement if the regulatory and cost structures improve. Still, the rollback highlights how quickly large digital-asset ventures can change direction when energy prices and operational risks rise.

A Project Undermined by Costs, Tariffs, and Debt Disputes

When Tether arrived in Uruguay, executives believed the country could support one of the company’s largest infrastructure pushes to date. Their plan required around 165 megawatts of power for the data processing centers alone, with the renewable park intended to provide additional capacity and long-term environmental benefits. But within months, local economic friction appeared.

Reports indicated that the terms of Tether’s power contract, along with 31.5 kV toll fees in Florida, significantly elevated operating expenses. Rising global energy prices only made the situation more difficult. Beginning in November 2023, Tether repeatedly petitioned regulators for a revised tariff structure. One proposal involved shifting to 150 kV tolls to reduce costs and realign the project with its energy-use profile.

Analysts noted that the change might have benefited UTE as well, potentially eliminating the need for additional grid expansions. But the idea never moved forward, and cost concerns continued to grow.

Public clues about the project’s weakening trajectory first surfaced in September, when Telemundo reported that Tether intended to cease its mining operations. The report said UTE shut down power to the company after it failed to pay a $2 million bill from May and owed an additional $2.8 million tied to other local developments. Two days earlier, Busqueda had published similar figures, suggesting the total liability reached almost $4.8 million.

Tether pushed back against the reports, arguing it was not leaving Uruguay because of a single unpaid bill or a short-term liquidity issue. The company said the broader disagreement over contract terms and long-term tariff predictability was the core reason for reevaluating its plan. It acknowledged the debts but described them as part of a more complicated negotiation process involving the mining operator and government officials.

Executives said they are still exploring ways to restructure the initiative, noting that the mining program was originally built around long-term renewable energy goals. Those plans will now be reassessed based on market conditions and regulatory clarity.

Tether emphasized that it is not ruling out future activities in the country, but admitted that the current economic framework cannot support the scale of operations previously expected. With 30 employees now dismissed and development halted, the company’s Uruguay vision has effectively been put on pause.

Ratings Pressure and Market Scrutiny Add to Tether’s Challenges

As the mining project unraveled, Tether also found itself facing scrutiny from traditional finance. S&P Global Ratings assigned the USDT stablecoin its lowest possible stability score, “5 (weak)”,  citing what it described as “persistent gaps in disclosure” and a growing share of high-risk assets inside Tether’s reserves. The agency noted that Bitcoin, gold, secured loans, and corporate bonds now make up a noticeably larger portion of the company’s backing.

S&P’s assessment stated that Bitcoin represents about 5.6% of USDT in circulation, surpassing Tether’s 3.9% overcollateralization buffer. Analysts Rebecca Mun and Mohamed Damak warned that a steep decline in Bitcoin or other volatile assets could reduce the cushion protecting the peg during periods of heavy redemptions.

Tether strongly disagreed with the downgrade. CEO Paolo Ardoino dismissed the rating as an example of legacy institutions misunderstanding digital-asset economics. “We wear your loathing with pride,” he wrote, criticizing what he called “classical rating models built for legacy financial institutions.” He argued that these same models had “historically led private and institutional investors to invest their wealth into companies that despite being attributed investment grade… collapsed.”

Ardoino described Tether as “overcapitalized” and free from toxic assets, insisting the company remains one of the most profitable in the industry. He also said the downgrade reflects traditional finance’s discomfort with new models that do not rely on conventional banking structures. “Tether is living proof that the traditional financial system is so broken that it’s becoming feared by the emperors with no clothes,” he added.

Industry leaders quickly weighed in. Binance founder Changpeng Zhao praised Tether’s transparency efforts, and BitMEX co-founder Arthur Hayes framed the downgrade as a sign of crypto’s disruptive potential. Supporters argued that USDT has repeatedly maintained its dollar peg despite criticism from large institutions.

Market data shows USDT remained stable at $1.00 on November 27, 2025, with a market capitalization just under $185 billion and dominance of nearly 6%. Trading volume was over $102 billion, reflecting continued liquidity and market reliance on the token. Price movements remained steady, reinforcing the perception that the rating had not influenced short-term market behavior.

Even so, analysts noted that regulatory pressure could grow. The researchers suggested that ongoing scrutiny might prompt regulators to push for stronger reserve disclosures from major stablecoin issuers. For now, Tether is not required to adjust its reserve structure, but calls for independent audits are likely to intensify.

As tensions grow between digital-asset companies and traditional finance, the situation underscores a broader debate over how stablecoins should be evaluated, regulated, and integrated into the global financial landscape.