Tether denies reports it ditched $500M crypto project in Uruguay

Stablecoin issuer Tether has denied widespread local media reports that it is exiting Uruguay over a $4.8 million debt dispute with one of the country’s state-owned electricity entities.

According to local news source Telemundo, Tether abandoned its crypto mining operations and future plans after the National Administration of Power Plants and Electric Transmissions (UTE) unplugged power at its facilities for failing to pay a $2 million electricity bill for May.

It also reported that Tether also owed around $2.8 million for other local projects, bringing its total liabilities to roughly $4.8 million, excluding fines and surcharges, Telemundo said on Saturday, citing fellow local news outlet Busqueda, which first reported the news two days earlier.

But Tether knocked back the reports in comments to Cointelegraph on Monday, stating: “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.”

Tether acknowledged the debt dilemma, stating that the local company running the crypto mining facilities has been engaging in “ongoing discussions with the government to resolve the outstanding friction.”

“Tether remains supportive of these efforts and of a constructive path forward that reflects our long-term commitment to sustainable opportunities in the region.”

Tether announced plans to begin crypto mining in Uruguay in November 2023, with local media projecting the ventures could reach $500 million in investment.

Electricity costs in Uruguay is high by LATAM standards

While Tether denied exiting, local reports linked the alleged shutdown to high electricity costs, which Tether didn’t comment on. Uruguay’s relatively high electricity costs have made it less attractive for energy-intensive operations such as crypto mining and AI.

In Uruguay, electricity prices range from about $60 to $180 per megawatt hour (MWh), far higher than in neighboring country Paraguay, where electricity can be produced for around $22 MWh from the Itaipu hydropower plant.

Tether also runs Bitcoin mining facilities in Paraguay.

Tether wouldn’t have been the first crypto miner to leave Uruguay

In 2018, South American Bitcoin mining company Vici Mining moved its facilities to Paraguay from Uruguay to capitalize on the cheaper electricity costs.

Vici engineer Nicolás Ribeiro told Telemundo: “If you look globally at the average electricity price, Uruguay is well above it. Although it is always a challenge to set up in a new country, when you look at this industry and realize that 80% of your operating cost is electricity, it is a very significant factor when deciding where to establish yourself.”

Ribeiro said the dispute with Tether should serve as a “warning signal” to policymakers about the challenges of attracting and retaining energy-intensive industries.

Tether was reportedly negotiating with UTE for a new facility, where it requested reduced electricity rates. Tether didn’t comment on that matter.

Stablecoin adoption on the rise in LATAM

Meanwhile, three vehicle makers — Toyota, Yamaha, and BYD — recently started accepting the Tether (USDT) stablecoin for payment in Bolivia to cope with the country’s shrinking US dollar reserves.

In Colombia, Western Union rival MoneyGram announced that its crypto payments app would offer locals a solution to save in US dollar stablecoins as the Colombian peso continues to weaken.

Magazine: Bitcoin mining industry ‘going to be dead in 2 years’: Bit Digital CEO