- Tether will wind down its Uruguay operations, citing high electricity costs and a lack of a competitive, predictable tariff framework.
- Plans for a US$500 million buildout, including three data centers and a 300 MW renewables park, are canceled.
- Talks with UTE stretched nearly two years; proposals such as 150 kV peajes and contract changes were not approved.
- Power was cut to two mining sites on July 25 after unpaid bills; arrears neared US$4.8 million excluding penalties.
After lengthy talks with Uruguay’s state utility, Tether Holdings Ltd. says it will wind down local operations, pointing to high electricity costs and the absence of a competitive, predictable tariff scheme for projects of its scale. The company indicates a phased reduction in power use toward year-end and a halt to fresh capital commitments.
What had been pitched as a large-scale expansion—US$500 million across data centers and renewable generation—will not move forward under current conditions, according to company communications. Tether, through affiliate Microfin, had brought online bitcoin mining capacity in Florida department and stressed that the decision stems from tariff structure constraints, not a one-off incident.
What prompted the U-turn
Across Uruguay’s private sector, electricity prices are frequently cited as a barrier to energy-intensive investments. Past policy efforts sought to enable wholesale power contracting to better tap renewables, yet large loads such as data centers often find today’s tariffs leave them “out of market” compared with regional alternatives.
In Tether’s case, negotiations with UTE spanned nearly two years. The company asked for volume-based pricing and a clearer, stable tariff framework, arguing such predictability is critical for multi-year infrastructure plans. By mid-August 2024, Tether sent a letter outlining the status and seeking a formal response by August 31, warning that uncertainty was putting the project on ice.
Two quick-to-implement options were laid out: align the Florida power purchase contract with the structure discussed for Tacuarembó, or shift from 31.5 kV peajes to 150 kV to reflect the project’s scale. While a technical pathway was floated in April 2024, UTE’s Board did not finalize approval, leaving the matter unresolved.
Scale of the planned buildout
At full stride, the initiative envisioned three data processing centers across Florida and Tacuarembó with an estimated demand of about 165 MW. To support that load, Tether mapped a complementary 300 MW wind-and-solar park, plus roughly US$50 million in grid works that would ultimately be owned by UTE and integrated into the national system.
Capital deployment had already surpassed US$100 million, including operational sites in San Gabriel and Sarandí Grande dedicated to bitcoin mining—an activity that requires intensive computing and substantial cooling power. Without a tariff accord, Tether says the third data center and the 300 MW renewables project will not advance.
Power cuts and outstanding balance
On July 25, UTE cut electricity to two mining facilities following prolonged nonpayment after May. Local reports put monthly consumption near US$2 million and a balance close to US$4.8 million (excluding penalties) at the time of the interruption, with the cut triggered when arrears surpassed posted collateral.
Earlier, in June, UTE’s leadership had signed off on a memorandum of understanding that could have paved the way for improved terms—but only if obligations remained current. Despite being among UTE’s larger loads, Tether did not secure a preferential tariff and ultimately chose to step back.
The company has emphasized that the operational exit is driven by structural pricing constraints, not solely by the late-July service interruption. It frames the choice as a strategic reset in the absence of a competitive, durable tariff framework.
Wider implications for Uruguay
Project backers argued the plan could have positioned Uruguay as a hub for data infrastructure anchored in renewables. The effort, led on the business side by Juan Sartori, had even eyed expansion opportunities in Brazil. With the tariff impasse unresolved, the company says it must rethink its regional strategy.
The debate now turns to how Uruguay can attract energy-intensive computing while safeguarding grid economics. Peaje levels (31.5 kV vs. 150 kV), long-term contract design, and market-based mechanisms are likely to shape whether future large-scale digital infrastructure finds the country cost-competitive.
With negotiations stalled and load ramp-down underway, Tether’s shelved US$500 million plan underscores a broader friction point: aligning massive, always-on power demand with tariff structures that make investment viable, predictable and sustainable for both sides.
