Tether increases its wager on Bitcoin mining by providing debt financing worth $610 million to the German Bitcoin mining company Northern Data AG.
According to an announcement dated November 2, Northern Data AG has secured a 575-million-euro ($610-million) debt financing facility from Tether to drive further investments across its enterprises.
The debt capital will enable Northern Data Group to invest in its three business divisions, including its artificial intelligence cloud service provider, Taiga Cloud, Ardent Data Centers, and Peak Mining, its mining business.
The announcement notes that the focus of these investments will be the procurement of additional hardware and the expansion of Bitcoin mining operations using liquid-cooling mining technology.
According to the announcement, the debt facility is unsecured, has terms until January 1, 2030, and is subject to standard market conditions.
The debt financing follows Tether’s investment in Northern Data. The USDT issuer invested an undisclosed quantity in Northern Data in September 2023 to support AI initiatives.
Tether asserted that the investment was distinct from its reserves and would not affect consumer funds. Tether has been aggressively pursuing Bitcoin mining operations since 2023 when it launched its mining operations and introduced its mining software.
Paolo Ardoino, CEO of Tether, while speaking on the issue, stated:
“This loan facility, with an upper limit of 575 million EUR, is intended to be drawn over the next year. Importantly, it will be covered using the company’s profits and will not be part of Tether’s stablecoin consolidated reserves and in fact done via a separate investment vehicle under the Tether Group to have proper segregation.
As publicly disclosed in our reports, Tether has been achieving an average of ~1B per quarter in net operating results as reported over the last quarters and the project remains the same going forward, due to the high interest rates on US T-Bills. A significant portion of these profits has been prudently retained within our reserves, contributing to the accrual of excess reserves. This strategy has enabled us to overcollateralize our stablecoins by as much as 104%.
Additionally, as part of our disclosed plans, a minor portion of these profits will be strategically reinvested in data, energy, and P2P communications infrastructure.”
According to Tether’s Q2 attestation from the accounting firm BDO, the stablecoin provider increased its excess reserves by $850 million, bringing the total to $3.35 billion.
In September 2023, it was also reported that its stablecoin loans surged despite the company working to cut such loans to zero last year.
