Tether Denies Exiting Uruguay Amid Debt Dispute
Tether, the issuer of the popular stablecoin, has refuted claims made by local media suggesting it is leaving Uruguay due to a $4.8 million debt conflict with a state-run electricity provider. Reports from Telemundo indicated that Tether ceased its cryptocurrency mining operations and future initiatives after the National Administration of Power Plants and Electric Transmissions (UTE) cut power to its facilities for not settling a $2 million electricity bill for May.
Details of Financial Obligations Reported
The same reports mentioned that Tether also owed approximately $2.8 million related to other local endeavors, totaling around $4.8 million in debts, not including additional fines and fees. Telemundo cited Busqueda, another local news outlet, which initially broke the story two days prior.
Tether’s Response to Exit Claims
In a statement to Cointelegraph, Tether dismissed the exit claims, asserting, “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 firm acknowledged its financial challenges but emphasized that the local entity managing its mining operations is actively engaged in discussions with the government to resolve the ongoing issues.
Commitment to Sustainable Opportunities
Tether expressed its support for these dialogues and reiterated its dedication to finding a constructive solution that aligns with its long-term vision for sustainable investment opportunities in the region. The company had previously announced intentions to commence crypto mining operations in Uruguay in November 2023, with projections suggesting that investments could reach up to $500 million.
High Electricity Costs in Uruguay
While Tether negated the exit rumors, local sources attributed the alleged shutdown to the high costs of electricity in Uruguay, a point Tether did not address. The country’s electricity prices, ranging from $60 to $180 per megawatt hour (MWh), are significantly higher than those in neighboring Paraguay, where the Itaipu hydropower plant offers rates around $22 MWh. This disparity makes Uruguay less appealing for energy-intensive operations like crypto mining and artificial intelligence.
Precedents of Crypto Miners Moving from Uruguay
Tether would not be the first cryptocurrency miner to exit Uruguay; in 2018, Vici Mining, a South American Bitcoin mining firm, relocated its operations to Paraguay to take advantage of lower electricity costs. Vici engineer Nicolás Ribeiro noted, “If you look globally at the average electricity price, Uruguay is well above it. Although establishing a presence in a new country is always a challenge, in this industry, where electricity constitutes 80% of operational costs, it is a significant factor in location decisions.” Ribeiro suggested that the issues faced by Tether should serve as a cautionary tale for policymakers regarding the difficulties of attracting and retaining energy-intensive industries.
Tether’s Negotiations with UTE
Reports indicated that Tether was in talks with UTE for a new facility, during which it requested reduced electricity rates, although the company did not comment further on this matter.
Growing Stablecoin Adoption in Latin America
On a broader note, the adoption of stablecoins is rising in Latin America. Recently, three automobile manufacturers—Toyota, Yamaha, and BYD—began accepting Tether (USDT) for payments in Bolivia as a response to the country’s dwindling US dollar reserves. In Colombia, MoneyGram, a competitor to Western Union, announced that its crypto payment application would provide locals with a means to save in US dollar stablecoins amidst the ongoing depreciation of the Colombian peso.
