Tether, the issuer of the USDT stablecoin, is making a significant bet on Bitcoin mining by offering a substantial debt facility of $610 million to Northern Data AG, a German-based Bitcoin mining company. The purpose of this debt capital is to empower Northern Data Group to make further investments across its various business divisions, including artificial intelligence cloud service provider Taiga Cloud, Ardent Data Centers, and Peak Mining. These investments will primarily focus on the acquisition of additional hardware and the expansion of Bitcoin mining operations with advanced liquid-cooling technology.
The debt facility, which is unsecured, follows standard market conditions and has a duration until January 1, 2030. Paolo Ardoino, CTO and CEO of Tether, explained that this loan facility will be drawn down gradually throughout 2024 and will be covered using the company’s profits. Importantly, it will not be part of Tether’s stablecoin consolidated reserves but will be managed through a separate investment vehicle under the Tether Group, ensuring proper segregation.
Tether has been achieving impressive net operating results, averaging around $1 billion per quarter, thanks to high interest rates on U.S. Treasury Bills. This financial strength has allowed Tether to accumulate excess reserves and overcollateralize its stablecoins by as much as 104%. Additionally, Tether has been planning to reinvest a portion of its profits in data, energy, and peer-to-peer communications infrastructure.
It’s worth noting that Tether previously invested in Northern Data in September 2023 to support AI initiatives. This investment was separate from Tether’s reserves and did not impact customer funds. Tether has been actively expanding into Bitcoin mining operations in 2023, establishing its mining facilities and introducing proprietary mining software. Tether’s Q2 attestation revealed an $850 million increase in excess reserves, bringing the total excess reserves to $3.3 billion.
This move reflects Tether’s growing involvement in the cryptocurrency ecosystem and its strategic investments in Bitcoin-related businesses.