Tether Set to Become Major Bitcoin Miner With $500 Million Investment
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Tether has announced plans to invest a staggering $500 million to establish itself as a relevant player in the burgeoning Bitcoin (BTC) mining space.
$500M to Be Disbursed Over the Next Six Month Structure
Tether is taking giant steps to scale past major players in the Bitcoin mining industry. In an exclusive interview with Bloomberg on November 17, Paolo Ardoino, the incoming CEO of the $87 billion stablecoin provider, disclosed the details of this strategic investment plan.
Tether, the issuer of the largest US dollar stablecoin, is aiming to become a bitcoin miner, and it's planning to invest $500 million to establish itself as a major player, per Bloomberg.
— unusual_whales (@unusual_whales) November 17, 2023
Over the next six months, Tether will invest $500 million into the Bitcoin mining space, building its facilities and securing stakes in existing companies.
Ardoino emphasized the company’s commitment to becoming an integral part of the Bitcoin mining ecosystem, stating, “When it comes to the expansions, building new substations and new sites, we are taking them extremely seriously,” he said.
The investment comprises a portion of the $610 million credit facility that Tether extended to Northern Data AG, a publicly traded Bitcoin mining firm, earlier this month.
Tether, the stablecoin issuer, has provided a $610 million debt financing facility to Northern Data AG, a German-based Bitcoin mining company, to drive further investments across its businesses. The debt capital specifically aims to enable Northern Data Group to invest in its…
— Nguyen (@TeamDiData) November 3, 2023
Ardoino also revealed the company’s mining ventures in Uruguay, Paraguay, and El Salvador, each boasting an impressive capacity ranging from 40 to 70 megawatts.
When queried about Tether’s primary objectives, he said the company aims to grow its share of the total computing power to run the Bitcoin network to 1%.
While no official timeframe was suggested to achieve this goal, the stablecoin firm will have to compete with Marathon Digital Holdings, the largest public Bitcoin mining company, which contributed 4% to the market share.
Referencing Ardoino’s comments, Jaran Mellerud, the chief executive of MinerMetrics, a Bitcoin Mining data and research platform, told Bloomberg that attaining a 1% market share would position Tether among the top 20 BTC mining firms.
“Given Tether’s importance in the crypto ecosystem and its financial muscle, its market share over time will likely grow far beyond its initial 1% goal,” he said.
Looking ahead, Ardoino anticipates Tether’s owned mining operations to reach 120 megawatts by the end of 2023, with a projected scale-up to 450 megawatts by the conclusion of 2025.
The New Gold Mine Sector
The surge in interest within the mining industry represents a notable shift from Tether’s primary focus, centered around managing the USDT stablecoin – a cryptocurrency designed to maintain a peg with the value of the US dollar.
The incoming CEO had made an earlier announcement on November 12, stating Tether’s objective of establishing a minimum of five sophisticated projects for 2024, which could center on Web2 centralized services.
We're quite close to add another extremely powerful piece of the puzzle for @Tether_to ecosystem.
Total of 5 mind-blowing projects (and counting) for 2024.
Couple of these could obliterate some popular Web2 centralized services for good.
Pure Real World Ecosystem aka "Things…
— Paolo Ardoino 🍐 (@paoloardoino) November 12, 2023
Recent investments indicate that the Bitcoin mining sector could be one of the centers the stablecoin provider deploys projects.
The entrance of a company with such deep pockets as Tether could shake up hot-red competition for crypto assets’ finite token supply.
With Tether venturing into Bitcoin mining, it underscores the growing convergence of different sectors within the crypto industry. This investment could have interesting implications for blockchain technology and its applications. But is not too late?
— Sergey Golubev (@serge_golubev) November 17, 2023
This can involve strategies like acquiring or mining tokens, influencing token prices, or implementing other initiatives that could affect the supply and demand of the crypto assets.
Moreover, a new avenue to diversify generated profits would be created.
Tether Strategy to Bypass Bitcoin-Halving & Electricity Constraints
Tether is poised to encounter challenges in the upcoming shift to the mining industry, particularly because of Bitcoin halving and electricity-related concerns.
The fourth halving event for Bitcoin is slated for April 2024, where the rate of rewards for miners will be reduced.
— WhalesBsc (@WhalesBsc) November 13, 2023
Simultaneously, the high computing power needed to obtain new BTC tokens is driving an increased demand for electricity.
Ardoino told Bloomberg that the firm is evaluating a potential site with a 300-megawatt capacity. He also noted that Tether has also set up facilities in large containers in case they need to move to new locations should electricity become cheaper elsewhere.
“Mining for us is something we must learn and grow over time. We are not in a rush to become the biggest miner in the world,” he said.