Tether is mulling an investment of $500 million in the new line of bitcoin mining.

Tether Holdings Ltd., a prominent stablecoin issuer with an $87 billion market cap, is venturing into the highly competitive world of Bitcoin mining with a substantial investment of approximately $500 million over the next six months. Paolo Ardoino, the incoming CEO, revealed that Tether plans to achieve this by constructing its own mining facilities and acquiring stakes in other companies. This move signifies a departure from Tether’s primary business of managing the USDT stablecoin, which is pegged to the US dollar.

The company’s investment includes a portion of the $610 million credit facility extended to Northern Data AG (ETR: NB2), a publicly-traded Bitcoin mining company. Tether is establishing Bitcoin mines in Uruguay, Paraguay, and El Salvador, with capacities ranging from 40 to 70 megawatts each. The goal is to reach a 1% market share of the total computing power required to run the Bitcoin network. Tether’s ambitious plan, driven by its significant financial resources, could position it among the world’s top Bitcoin mining companies. (Bloomberg)

Tether anticipates reaching 120 megawatts across its mining operations by the end of 2023 and aims for up to 450 megawatts by the end of 2025. The company is allocating around $150 million for mining opportunities where it is directly involved. In addition to the impact on Tether’s operations, its substantial investment in the industry could affect competitors, especially given the challenging financial landscape faced by many Bitcoin miners.

While Tether’s move into Bitcoin mining presents lucrative opportunities, challenges such as increasing competition, thinning profit margins, and the upcoming halving in Bitcoin’s code pose potential headwinds. Despite these challenges, Tether remains uniquely positioned as a private company with substantial cash reserves, enabling it to make significant investments in the market, even during bearish periods.

Tether acknowledges the need for a gradual learning curve in mining, emphasizing a strategic approach over rushing to become the world’s largest miner. The company’s evaluation of a potential 300-megawatt capacity site reflects its commitment to adapting and growing in this evolving landscape.

Related Story: Tether To Mine Bitcoin In Uruguay Using Clean Energy

Image by Augusto Ordóñez from Pixabay