Tether, the largest issuer of stablecoins in the world, has just entered the highly competitive bitcoin mining ecosystem. The company is launching with a $500 million investment that could make it one of the 20 largest bitcoin mining companies in the world. Details.
Tether wants to hold 1% of the total hashrate of the bitcoin network
While there is talk of the upcoming reduction in the reward for BTC mining, the Tether company decides to invest half a billion in the activity. Tether announces that it will acquire stakes in mining companies such as the company Northern Data AG which is listed on the stock exchange.
The company is also building its own mining sites in El Salvador, Uruguay and Paraguay, with each site having a capacity ranging from 40 to 70 MW. Tether’s objective, reveals Paolo Ardoino in an interview, is to reach a total capacity of 120 MW by the end of 2023 on its own mining installations.
According to the CEO, Paolo Ardoino, Tether is “committed to being part of the Bitcoin mining ecosystem.” By 2025, the $87 billion company is targeting computing power of 450 MW. This is equivalent to 1% of the total hashrate of the bitcoin network, or 25% of the hashrate of the largest bitcoin miner, Marathon Digital Holdings. If Tether really reaches this hashrate, it would then be one of the 20 most powerful bitcoin mining companies in the world.
Tether and its financial power, a threat to traditional crypto miners?
If the BTC mining activity is already highly competitive, Tether could very quickly break into this new activity. Indeed, since last year’s bear market, bitcoin mining companies have suffered from a serious lack of liquidity.
The context had made it almost impossible for minors to access debt financing. Several players in the ecosystem like Core Scientific came close to bankruptcy, while others, like Compute North, filed for bankruptcy altogether. In this context, Tether’s financial power, its position in the cryptocurrency ecosystem, and its investments in artificial intelligence give it a huge competitive advantage.
According to Jaran Mellerud, general manager of Bitcoin mining research and data collection company MinerMetrics, Tether is better suited to make large counter-cyclical investments. He recalls that the company indeed manages astronomical volumes of liquidity even in bear markets. That being said, everything may not be a foregone conclusion for Tether. The next bitcoin halving could have an impact on the profitability of bitcoin mining. Tether will also have to face these headwinds, even if the post-halving growth in the price of bitcoin tilts the balance in its favor.
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