Stablecoin issuer Tether is taking steps to become one of the leading Bitcoin mining companies, according to Bloomberg. The newly appointed CEO, Paolo Ardoino, stated in an interview that the company plans to invest approximately $500 million over the next six months to achieve this goal, through the construction of its own mining facilities and investing in other companies.
These investments include the $610 million credit line that Tether provided to publicly listed Bitcoin miner Northern Data AG this month. Tether previously acquired a stake in this Frankfurt-based company in September.
Ardoino stated that Tether is building Bitcoin mining farms in Uruguay, Paraguay, and El Salvador, with each farm having a power capacity ranging from 40 to 70 megawatts. The company aims to increase its share in the Bitcoin network’s total hash rate to 1%, but Ardoino did not specify a timeline for achieving this goal. In comparison, the share of large listed mining company Marathon is approximately 4%.
Jaran Mellerud, CEO of Bitcoin mining data research company MinerMetrics, stated:
Ardoino added in the statement that Tether expects its direct mining operations to reach 120 megawatts by the end of 2023 and 450 megawatts by the end of 2025. He mentioned that the company has allocated approximately $150 million for mining opportunities that Tether is directly involved in, some of which are still being deployed to new locations.
Competition in Bitcoin mining
Tether earns money by managing its stablecoin USDT’s $87 billion reserves, which include U.S. Treasury bonds and other assets. As of September 30, Tether has accumulated approximately $3.2 billion in excess reserves. According to the quarterly attestation report released on October 31, the company has invested over $800 million in various industries and research areas, including Bitcoin, using part of its profits this year. The entry of a company with such strong funding may disrupt the competitive landscape of Bitcoin’s limited supply and also provide new revenue streams for Tether, diversifying its sources of profit.
Mellerud stated:
However, even for Tether, unfavorable conditions still exist. The intensifying competition means that the profit margin is becoming smaller and the upcoming Bitcoin halving event is expected to significantly impact miners’ mining revenue next year. As miners continue to deploy mining equipment, mining difficulty has surpassed historical highs several times this year. The higher the computing power owned by miners, the more likely they are to receive a portion of the mining rewards, giving an advantage to financially strong companies that can allocate additional resources.
Ardoino stated that Tether is currently evaluating a potential mining site with a 300 megawatt power capacity. Due to the rise in Bitcoin prices, its mining operations have become profitable. The company also installs its mining facilities in large shipping containers so that it can quickly relocate to new locations when electricity costs become cheaper elsewhere.
