According to a Bloomberg report, Tether Holdings Ltd., the issuer of the USDT stablecoin, is diversifying its business activities by venturing into Bitcoin mining and planning to invest around $500 million over the next six months. This move could significantly impact the competitive dynamics in the field.
Currently, Tether is building Bitcoin mining facilities across Uruguay, Paraguay, and El Salvador, with each location having a capacity ranging from 40 to 70 megawatts. By the end of 2023, Tether aims to reach a mining capacity of 120 MW, with plans to scale it up to an impressive 450 MW by the end of 2025. This ambitious plan underscores Tether’s effort to capture 1% of the total Bitcoin network hashrate.
Notably, alongside this ambitious plan, Tether is also employing innovative financial strategies. The $500 million investment includes a portion of the $610 million credit facility extended to the publicly-traded Bitcoin mining company Northern Data AG, which Tether recently entered into a cooperative and investment relationship with. Tether had previously acquired shares of Northern Data AG in September, paving the way for this recent collaboration and investment.
Tether’s bold initiative marks a significant milestone in the development of Bitcoin mining activities. By daring to enter the mining sector, which has traditionally been dominated by specialized entities, Tether aims not only to diversify its holdings but also to strengthen its position within the cryptocurrency ecosystem.
With such a substantial investment, Tether is signaling a change in its strategic direction to solidify its position in the market beyond being just a leading stablecoin issuer.
However, Tether’s foray into Bitcoin mining is not without potential implications and debates. This move could trigger discussions about decentralization, scrutiny of Tether’s significant investment, and their influence over a portion of Bitcoin’s hashrate. Moreover, concerns about environmental impact due to Bitcoin mining’s energy-intensive nature may receive more attention as Tether plans to significantly increase its mining capacity.