Is it another signal for the next crypto bull run? In an ambitious move within the crypto mining sector, the Tether Group, which is behind the USDT stablecoin, has fortified its commitment to Bitcoin mining. It has issued a substantial debt facility to Northern Data AG, a leading German Bitcoin mining firm. The publicly traded mining behemoth has secured a whopping €575 million debt financing from the Tether Group, set to mature on January 1, 2030.
This strategic financial maneuver is unsecured, adhering to standard market terms, signaling a bold investment in the future of crypto mining. Northern Data AG plans to channel this infusion of capital into three primary business vectors: Taiga Cloud, Ardent Data Centers, and Peak Mining. The primary thrust is to augment the Taiga Cloud division, positioning Northern Data as a powerhouse Generative Artificial Intelligence Cloud Service Provider within the European market.
This new stream of debt capital is poised to facilitate the acquisition of cutting-edge hardware and the expansion of Bitcoin mining operations, emphasizing the introduction of advanced liquid-cooling mining tech. Paolo Ardoino, CTO and CEO of Tether, underlined the loan facility’s distinct operational framework. Scheduled to be drawn throughout 2024, the repayment will be executed using the company’s profits, assuring that it remains segregated from Tether’s stablecoin reserves through a separate investment vehicle.
Ardoino further disclosed Tether‘s strategic financial reserves policy, highlighting that a robust portion of profits has been meticulously retained within reserves. This approach has not only strengthened the company’s financial bedrock but has also allowed for the overcollateralization of its stablecoins by an impressive 104%.
This strategic reinvestment follows Tether‘s earlier equity injection into Northern Data, a September 2023 initiative aimed at propelling AI ventures. Asserting the autonomy of this investment, Tether has reassured that the venture is financially detached from its stablecoin reserves and customer funds remain unaffected.2023 has seen Tether actively broaden its horizons in Bitcoin mining, inaugurating its own operations and rolling out bespoke mining software.
Financial transparency reports reveal a bolstering of Tether‘s fiscal health, with a Q2 attestation from BDO indicating a $850 million increase in excess reserves, thereby elevating the total to a formidable $3.3 billion. Despite efforts to curtail stablecoin loans in the preceding year, September reports highlighted a surprising surge in such loans.
