Tether-Backed Northern Data Striking Deals To Sell Its Crypto-Mining Arm: Bloomberg

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Northern Data AG, a software company in Frankfurt, Germany, is nearing an agreement to sell its crypto mining operations as per the latest Bloomberg report. This move comes as the company looks to capitalize on November’s Bitcoin rally.

Northern Data’s Chief Financial Officer, Elliot Jordan, noted that the company has hired bankers, invited bidders to come forward, and is now fielding proposals. “It’s ongoing is probably the best way to describe it — advanced in terms of offers coming in from a number of different parties,” Jordan stated during a presentation at the Deutsches Eigenkapitalforum on Wednesday.

Northern Data To Expand Its AI Business

Northern Data, backed by Tether Holdings Ltd., is aiming to raise funds to expand its artificial intelligence services business. Notably, many miners are exploring this shift after an April Bitcoin software update halved their main source of revenue.

Jordan noted that while Northern Data was not putting a valuation on the business, it reported estimates of $300 million to $500 million dated from before the Bitcoin rally. “Obviously it’s a good time to be selling this position,” he told the investors.

Tim Wunderlich, an analyst at Hauck Aufhaeuser Lampe Privatbank AG, predicts that with peers willing to pay $100 million per exahash operations per second, this could result in divestment proceeds of around $800 million in a best-case scenario. 

Furthermore, In May, the company announced its mining arm’s partnership with Penguin Infrastructure Holding for 28 megawatts of mining capacity, aiming to boost its hash rate, which is the total computing power supporting the network. “We mine 7.9 exahash, which is which is just under 1% of the overall haul for Bitcoin mining,” Jordan noted.

The Transition From Miners To AI

The Frankfurt-listed company decided in October to sell its crypto-mining business. This potential divestment could allow the company to focus on its growing artificial intelligence (AI) solutions business.

Since the Bitcoin halving in April, many miners faced reduced block rewards. August 2024 was identified as the toughest month for Bitcoin miners due to lower fees and a reduced hashrate. To address these challenges, some miners have shifted to supporting AI platforms, which also require significant computing power.

Notably, the transition of certain Bitcoin miners to AI has bolstered their financial performance. As JPMorgan noted in June, Core Scientific’s announcement of a deal to host 200 megawatts of GPUs for Coreweave alone led to a $4 billion increase in the combined market capitalization of approximately 14 Bitcoin mining companies.

Tether’s commodities liquidity pool could hit $5 billion!

Recently, Tether’s CEO Paolo Ardoino has noted that the size of Tether Investment’s liquidity pool, set aside for financing transactions of raw materials, could grow to between $3 billion and $5 billion by 2026. Notably, Tether Investments plans to lend capital to commodities brokers and earn interest on the temporary financing.

He underscored that it is a way to provide partner liquidity to a sector always hungry for liquidity. Ardoino stated that Tether Investments is already working with some of the sector’s largest commodities traders. He noted their interest in using USDT for commodity trading due to its high level of transparency and speed.