In response to recent reports alleging its exit from Uruguay, Tether, the issuer of the USDT stablecoin, has firmly denied claims that it has ceased its crypto mining operations in the country due to a $4.8 million debt controversy involving a state-owned energy company.
Local media outlet Telemundo recently reported that Tether’s operations were halted after the National Administration of Power Plants and Electric Transmissions (UTE) cut power to its facilities, citing an unpaid electricity bill of $2 million for May. Furthermore, the report noted that the company owed an additional $2.8 million for various local projects, accumulating total liabilities of approximately $4.8 million, not including potential fines and fees.
Addressing these claims, Tether clarified its position in an official statement to Cointelegraph on Monday: “We continue to evaluate the best way forward in Uruguay and the region more broadly. While reports have speculated an exit from the region, these do not accurately reflect the situation.”
The company admitted to facing difficulties regarding its debts but emphasized that the local firm managing its mining operations has been actively engaging in discussions with the government to rectify the ongoing issues. “Tether remains supportive of these efforts and of a constructive path forward that reflects our long-term commitment to sustainable opportunities in the region,” the statement read.
Tether initially announced plans to launch its crypto mining ventures in Uruguay in November 2023, with investors estimating potential capital influxes to reach $500 million. However, the economic landscape presents challenges, particularly due to high electricity costs that have made the country less appealing for energy-intensive operations like crypto mining.
Electricity prices in Uruguay fall between $60 to $180 per megawatt hour (MWh), significantly higher compared to neighboring Paraguay, which benefits from cheaper electricity rates in the vicinity of $22 per MWh, owing to the Itaipu hydroelectric plant. Tether also operates Bitcoin mining facilities in Paraguay, taking advantage of these lower costs.
Tether would not be the first entity to reconsider its operations in Uruguay due to energy expenses. In 2018, Vici Mining, a South American Bitcoin mining company, relocated its facilities from Uruguay to Paraguay to leverage the latter’s cost-efficient energy supply. Vici engineer Nicolás Ribeiro indicated to Telemundo that the high electricity costs in Uruguay represent a considerable burden for mining operations, as energy typically constitutes 80% of overall operational expenses.
“The ongoing issues faced by Tether should act as a wake-up call for policymakers regarding the difficulties of attracting and sustaining energy-intensive industries,” Ribeiro noted. It has been reported that Tether is currently in negotiations with UTE about establishing a new facility, seeking more favorable electricity rates.
In a broader context, Tether’s stablecoin is witnessing increased adoption across Latin America. Recently, major automobile manufacturers like Toyota, Yamaha, and BYD began accepting USDT for payments in Bolivia, a move prompted by the country’s dwindling US dollar reserves. Additionally, in Colombia, MoneyGram, a competitor to Western Union, announced that its crypto payments application would offer services enabling users to save in US dollar stablecoins, reflecting changing economic dynamics in the region.
The discussions surrounding Tether in Uruguay highlight ongoing challenges faced by crypto companies in securing viable operational conditions in various markets, emphasizing the critical relationship between energy costs and the sustainability of crypto operations.
