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Stablecoin issuer Tether has halted a nearly $120 million project in Uruguay as part of its plans to expand Bitcoin mining operations in South America. The project was cancelled due to a contract dispute between Tether and Uruguay’s state-owned electricity company, UTE.
The project was seen as one of the first steps in Tether’s strategy to expand its presence in South America. The company planned to operate two separate Bitcoin mining facilities in Uruguay, but the parties disagreed on the amount of electricity to be supplied to the facilities.
At the heart of the dispute was how the electricity capacity specified in the contract should be interpreted. Tether considered the agreed amount of electricity as the minimum capacity to be supplied initially. According to the company’s interpretation, a higher amount of electricity could be supplied if demand increased.
UTE, however, interpreted the amount of electricity in question as an upper limit and argued that the capacity specified in the contract could not be exceeded. The parties subsequently held negotiations to modify the contract terms in order to resolve the resulting disagreement.
However, because Tether representatives were not present at the meeting held to sign the amended contract, no agreement could be reached on the new terms. As a result, the Bitcoin mining project, worth approximately $120 million, was halted.
The termination of the project is considered a significant development in terms of Tether’s plans to expand its energy infrastructure-based Bitcoin mining investments globally. While the company has recently taken steps to diversify its Bitcoin mining and energy investments, the suspension of the Uruguay project stands out as a major obstacle to its expansion plans in South America.
It remains unclear whether Tether will develop a new project or alternative energy agreement related to its operations in Uruguay.
*This is not investment advice.
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