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When Tether Holdings chose Uruguay for its Bitcoin (BTC) mining activity, the reason was simple: cheap energy costs.
But once a lucrative affair, Bitcoin mining is no longer drawing the same kind of enthusiasm from Tether and other industry leaders.
Tether, the company behind the world's largest stablecoin USDT and the largest private holder of gold, recently announced it is now shutting down its operations in the Latin American country after failing to negotiate for lower prices.
Why is Bitcoin mining losing popularity?
Bitcoin mining is the process of using specialised computing systems to solve complex cryptographic functions so that you can verify and add blocks containing BTC transactions to the chain.
In exchange for adding blocks and securing the Bitcoin network, miners receive rewards in the form of BTC.
Though the price of Bitcoin has grown exponentially over the years, the mining reward has been significantly reduced due to multiple halving events.
Bitcoin halving is considered a necessary exercise to control the supply of new BTC coins, but it, as the name suggests, halves the block reward for miners.
In addition, Bitcoin mining is an energy-intensive process, and units usually prefer regions with lower energy costs to run their operations.
Tether shuts down Bitcoin mining operations in Uruguay
As per a local media report, Tether has informed Uruguay’s Ministry of Labor and Social Security (MTSS) that it is shutting down its Bitcoin mining operations in the country and laying off 30 of its 38 employees. Sources at the ministry confirmed the decision to the publication.
High energy costs and the lack of a competitive tariff framework in the country are among the reasons that the crypto company decided to retreat from Bitcoin mining.
The company said these conditions were incompatible with the scale of its planned investment.
A local media agency had already reported in September that Tether was exiting Bitcoin mining operations over a $4.8 million debt dispute with the National Administration of Power Plants and Electric Transmissions (UTE), a state-owned electricity entity. However, back then, the company had denied the reports.
Tether abandons $500M investment
When Tether arrived in Uruguay, it had outlined an investment plan of approximately $500 million.
The company has already invested over $100 million so far, with an additional $50 million allocated to infrastructure.
Tether said it had become financially unsustainable to proceed with the projects under current conditions. The company had been requesting a more competitive tariff scheme since November 2023, but to no effect, it added.
Tether proposed switching to 150 kV transmission tolls and modifying the energy-purchase agreement so that UTE would face reduced costs and prevent unnecessary construction. But it didn't work out in the end.
This article has been published in thestreet.com via Yahoo News.
Largest private gold holder shuts down Bitcoin mining operations
When Tether Holdings chose Uruguay for its Bitcoin (BTC) mining activity, the reason was simple: cheap energy costs. But once a lucrative affair, Bitcoin mining is no longer drawing the same kind of enthusiasm from Tether and other industry leaders. Tether, the ...
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