This study introduces an experimental framework employing hydrothermal carbonization (HTC) for the valorisation of factory tea waste as a solid fuel. Employing a centre composite design and response surface methodology, the investigation systematically assesses the influence of two critical process parameters, temperature (180–220 °C) and time (0–240 min), on higher heating value (HHV), hydrochar yield, and energy yield. The study identifies an optimized HTC condition (220°C, 55 min) resulting in the recorded HHV of 22.26±1.10 Mj/Kg. Combustion characteristics and kinetics of the factory tea waste-derived hydrochar (TW-hydrochar) is analysed through TGA and DTG, complemented by structural elucidation via FTIR and FE-SEM. Concurrently, the study reports the observation of carbon dots (TW-CDs) generation during TW-hydrochar production, characterized comprehensively through UV–visible spectroscopy, TEM, XRD, XPS, Zeta potential, and fluorescence methods. Further, antimicrobial properties of TW-CDs are rigorously investigated against Bacillus subtilis and Escherichia coli, manifesting pronounced antibacterial activity against B. subtilis and E. coli as evidenced by a 12 mm and 11 mm inhibition zone, respectively. This research contributes to the scientific understanding of tea waste valorization through HTC, providing insights into cleaner fuel options and the emergence of carbon dots with potential antibacterial applications.