Tether Denies Leaving Uruguay Amid Debt Dispute
Tether, the company behind the prominent stablecoin, has refuted local media claims about its withdrawal from Uruguay due to a $4.8 million debt conflict with a state-owned electricity provider. As reported by Telemundo, Tether is said to have halted its crypto mining initiatives and future projects after the National Administration of Power Plants and Electric Transmissions (UTE) cut off power to its facilities over a $2 million unpaid electricity bill for May. The report also indicated that Tether had accumulated an additional $2.8 million in debts related to other local ventures, totaling approximately $4.8 million, exclusive of fines and interest, according to the news outlet Busqueda.
Tether Responds to Reports
In a statement to Cointelegraph, Tether dismissed the claims about its exit from Uruguay, indicating that the situation is more nuanced. The company expressed, “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 existing financial challenges, mentioning that the local firm managing the crypto mining operations is in “ongoing discussions with the government to resolve the outstanding friction.” The company reiterated its commitment to exploring sustainable opportunities in the region.
Plans for Crypto Mining in Uruguay
Tether had previously announced intentions to initiate crypto mining operations in Uruguay in November 2023, with estimates suggesting potential investments could reach up to $500 million.
High Electricity Costs Affecting Operations
While Tether denied the reports of exiting, local speculation connected the situation to the high cost of electricity in Uruguay, a factor the company did not address. The nation’s electricity rates, ranging from $60 to $180 per megawatt hour (MWh), are significantly higher than those in neighboring Paraguay, where rates can be as low as $22 MWh due to hydropower resources. This disparity makes Uruguay less appealing for energy-intensive industries like crypto mining and artificial intelligence.
Historical Context of Crypto Miners in Uruguay
Tether would not be the first mining operation to leave Uruguay. In 2018, the South American Bitcoin mining firm Vici Mining relocated its facilities to Paraguay to take advantage of lower electricity costs. Vici engineer Nicolás Ribeiro highlighted the importance of electricity expenses, stating, “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 warned that the challenges faced by Tether could signal a need for policymakers to rethink strategies for attracting and retaining energy-intensive sectors.
Tether’s Negotiations with UTE
Reports indicated that Tether was in negotiations with UTE for a new facility, where the company had sought reduced electricity rates. However, Tether did not provide comments regarding these negotiations.
Growing Stablecoin Adoption in Latin America
In the broader context of Latin America, the adoption of stablecoins is on the rise. Recently, three automobile manufacturers—Toyota, Yamaha, and BYD—began accepting Tether (USDT) as a payment method in Bolivia to address the country’s dwindling US dollar reserves. In Colombia, the crypto payments app from MoneyGram, a competitor to Western Union, announced plans to offer a way for locals to save in US dollar stablecoins as the Colombian peso continues to depreciate.
