Tether Goes Into Bitcoin Mining – Invests $420 Million In Northern Data

TL;DR

• Through the partnership, Tether and Northern Data Group will collaborate on AI, communication, and data storage initiatives.
• Tether buys thousands of GPU chips for Northern Data in a convoluted multinational deal and then rents them out to startups.

Tether Invests in The German Mining Company Northern Data

On September 20, Forbes reported that Tether, the stablecoin company, is engaging in a $420 million transaction connected to artificial intelligence chips with an international Bitcoin mining company.

While Tether hasn’t publicly confirmed this investment, Forbes’ information seems derived from Northern Data’s and its leadership statements.

The report suggests that Tether has allocated $420 million to acquire 100,000 Nvidia H100 GPUs. This is about 2% of the 550,000 GPUs Nvidia plans to dispatch this year. 

This procurement, made for Northern Data—a German-based crypto mining company, is geared towards providing AI startups with cloud access to these advanced chips. Consequently, Tether will secure a 20% ownership in Northern Data.

However, details indicate that Tether didn’t directly handle the purchase. The deal and GPU acquisition are being managed through Damoon, an Irish subsidiary of Northern Data.

Regarding ownership distribution, Northern Data is set to hold a 70% stake in Damoon, a figure consistent with announcements from July. 

Forbes hints that Northern Data may intend to acquire Damoon fully, but the exact price of such an acquisition remains undisclosed.

Northern Data’s CEO, Aroosh Thillainathan, shared with Forbes that direct chip purchases from Nvidia were impossible for his company. 

This was due to the high demand depleting Nvidia’s chip supply rapidly. As a result, Tether stepped in to facilitate the purchase of the necessary chips.

Tether Ventures in Bitcoin Mining

This is not the first investment in Bitcoin mining made by the stablecoin issuer. Tether has also ventured into a green Bitcoin mining facility in Uruguay. 

Partnering with an unnamed “certified local enterprise,” the company is on a hiring spree. however, specific investment figures and details about the collaborating firm remain undisclosed.

Earlier this year, Tether intended to redirect a segment of its profits towards Bitcoin-related investments, encompassing regular BTC acquisitions and infrastructure funding. 

Following this disclosure, the company confirmed its inaugural Bitcoin procurements, holding assets worth approximately $1.5 billion in the cryptocurrency as of March’s conclusion.

Highlighting the collaboration between Bitcoin and Uruguay’s eco-friendly energy sources, Tether’s CTO stated that Tether is pioneering a sustainable approach to Bitcoin mining.

Tether Remains The Largest Stablecoin Issuer

USDT, issued by Tether, leads the stablecoin market with an impressive capitalization of $83 billion. 

Its backing primarily comprises U.S. government securities. But it also includes gold and a collection of secured loans to unidentified entities. 

The surge in yields over the previous year has benefitted the company significantly. This resulted in a net profit of $1.5 billion for Q1 2023.

But can the company conquer the Bitcoin mining industry the same way it conquered the stablecoin industry? We’ll see…