Tether Holdings Ltd., known for managing the $87 billion stablecoin USDT, is stepping into the competitive Bitcoin mining industry. Tether Bitcoin mining venture involves constructing a mining facilities and acquiring stakes in other companies.
In a recent interview, the upcoming CEO of the company, Paolo Ardoino, revealed his plans to invest nearly half a billion dollars in the Bitcoin mining sector over the next six months.
Tether’s Diversification Journey
The interview marks an exit from Tether’s primary business of running the USDT stablecoin. This surprising shift in the company’s strategy might disrupt the competition for Bitcoin’s finite supply.
This development aligns with Tether’s broader goal of diversifying its revenue streams beyond stablecoin management. Notably, the company’s profits, derived from managing a hoard of US Treasury bills and other assets, have already fueled investments exceeding $800 million this year, spanning various industry research-related fields, including Bitcoin.
Tether Bitcoin Mining Operations and Goals
Ardoino detailed Tether’s mining expansion into Uruguay, Paraguay, and El Salvador, with each site’s capacity ranging from 40 to 70 megawatts. The company made a strategic move into “sustainable Bitcoin mining operations in Uruguay” in May this year. The next month, it revealed its investment in a renowned Bitcoin mining venture in El Salvador called “Volcano Energy.”
The company aims to capture 1% of the total computing power running the Bitcoin network. Interestingly, this is a goal set against Marathon Digital Holdings’ 4% contribution. Tether aims to reach 120 megawatts in its direct mining operations by the end of 2023.
Moreover, it also projects to expand to 450 megawatts by 2025 with a dedicated $150 million investment. Jaran Mellerud, chief executive at Bitcoin mining data and research firm MinerMetrics, stated:
“A 1% market share would likely make Tether among the world’s 20 largest bitcoin mining companies. 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.”
Impact on the Bitcoin Mining Landscape
Tether’s commitment to significant investment in Bitcoin mining has implications for its competitors in an industry plagued by cash shortages. The fallout from last year’s digital asset price plunge led to the bankruptcy of major miners like Compute North and Core Scientific.
Tether’s unique position as a private company with substantial cash reserves allows it to potentially reshape the digital asset mining landscape. Mellerud stated:
“Being a private company that generates enormous amounts of cash even in the bear market, Tether is uniquely positioned to make massive anti-cyclical investments.”
Despite Tether’s financial prowess, challenges loom. Increasing competition may squeeze profit margins, and the upcoming bitcoin halving poses a threat to mining revenue in the next year.
However, Tether remains undeterred, presently evaluating a potential 300-megawatt capacity site and emphasizing a gradual approach to becoming a major player in the mining world.