NEW YORK - Tether Holdings Ltd., the company behind the widely-used USDT stablecoin, is making a strategic pivot with a substantial $500 million investment into the Bitcoin mining sector. Paolo Ardoino, the incoming CEO, announced that the funds will be allocated over the next six months to develop new mining facilities and acquire stakes in existing companies.
The investment follows Tether's acquisition of shares in Frankfurt-based Northern Data AG (ETR:NB2) and the extension of a $610 million credit facility to the same company back in September 2023. Ardoino highlighted Tether's dedication to becoming a significant player in the Bitcoin mining ecosystem, outlining their ambitious plans for new substations and sites.
Tether's venture into mining represents a diversification from its core business of managing the USDT stablecoin's reserves, which include $87 billion in US Treasury bills and other assets. The company's reserves have generated approximately $3.2 billion in excess cash as of September 30. So far this year, Tether has invested over $800 million in industry research and development, with a focus on Bitcoin.
The company is actively building mines in Latin America, with locations in Uruguay, Paraguay, and El Salvador, each with capacities ranging from 40 to 70 megawatts. Jaran Mellerud, CEO at MinerMetrics, noted that achieving a 1% share of the total computing power on the Bitcoin network would likely place Tether among the top 20 global Bitcoin mining firms.
Despite recent industry challenges, including bankruptcies from Compute North and Core Scientific due to liquidity issues, Bitcoin's price has seen a rebound above $37,000. Tether is also preparing for an upcoming 'halving' update to Bitcoin’s code that is expected to significantly reduce mining revenue next year.
In addition to evaluating a potential 300-megawatt capacity site, Tether has earmarked around $150 million for direct involvement in mining opportunities. The company's operations are already turning a profit thanks to rising Bitcoin prices and have adopted innovative strategies such as housing facilities inside relocatable containers to capitalize on fluctuating electricity costs.
As Tether aims for growth amidst record-breaking mining difficulties experienced this year, its strategy involves leveraging its financial strength for counter-cyclical investments and taking a measured approach rather than rushing to become the largest miner in the field.
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