Is Tether becoming Bitcoin’s most influential miner?

Ask a typical Bitcoiner to name the most influential mining company, and they would almost certainly name Bitmain. The company is by far the world’s dominant mining rig manufacturer and leads a near-majority of mining pools: Antpool and its many sockpuppets.

Quietly, however, stablecoin giant Tether has been increasing its influence with a variety of bitcoin miners across the globe.

The stablecoin giant recently invested $100 million in Bitdeer, a publicly traded company operated by a Bitmain co-founder, and it’s also the leading investor in Blockstream, Bitcoin’s leading development company.

Funded partly by Tether, Blockstream has an operating mining division and a dedicated purchasing division that securitizes Bitmain mining rigs. Bitfinex, Tether’s sister exchange, is the trading venue for the Blockstream Mining Note.

Tether has also either invested in or funded :

  • Salvadoran bitcoin mine Volcano Energy
  • A Bitcoin mine in Uruguay.
  • Swan Mining, which has deployed over $330 million from Tether and other investors. Tether also partners with Swan in its managed (cloud) mining service.
  • German bitcoin miner Northern Data AG. It bought equity in the company and established its €575 million debt facility in November.
  • Bitcoin miner ZettaHash.

Tether also has a mining-like operation called Luganodes focused on the Tron blockchain.

Read more: First bitcoin mining pool adds Stratum V2 feature to circumvent Bitmain

Profits from Tether capitalize bitcoin mines

In all, Tether has seemingly made good on its promise to invest at least $500 million into bitcoin mining over the past six months. If that pace of investment continues, Tether could become one of Bitcoin’s most influential mining companies.

Of course, the bitcoin mining industry isn’t large enough to absorb much more than a few billion dollars in annual investment. Total bitcoin miner revenue for an entire year is approximately $16 billion. The market capitalization for all mining companies is a single-digit multiple of that revenue.

The largest bitcoin mining companies, including Foundry, ViaBTC, CleanSpark, Marathon, Bitdeer, Riot, and MicroBT, boast values ranging from the high hundred millions to low-single digit billions. The largest company, privately held Bitmain, has sought financing at a valuation exceeding $40 billion.

One of the most profitable companies per employee in the world

Tether claims to be one of the most profitable companies per employee in the world. It reported a profit of $4.5 billion in Q1 2024, a number that exceeds the $4.3 billion in net income for the largest company in the US by assets, Fannie Mae.

Tether employs about 100 workers while Fannie Mae employs 8,100. Both companies expect to earn tens of billions of dollars in profit this year.

Of course, Fannie Mae uses the US ​​Financial Accounting Standards Board-controlled term ‘net income’ on its SEC Form 10-K when reporting its $4.3 billion in profit. Tether, in contrast, simply reported $4.5 billion in ‘profit,’ without adhering to any particular definition of that term.

If the two quarterly ‘profit’ numbers are comparable — and only Tether knows if they are — Tether claims $45 million in quarterly profit per employee versus Fannie Mae’s $530,000.

Indeed, interpreting Tether quarterly reports is more art than science. The company has never released audited financials and its executives consistently use non-standard words and phrases that don’t conform to US accounting standards.

For example, all of the information in Tether’s quarterly attestation ‘is not financial statements of Tether Holdings Limited’ yet is somehow ‘financial information extracted from its accounting records,’ whatever that means.

In any case, Tether generates an extraordinary amount of profit from interest on its reserves backing USDT and other stablecoins. Because its stablecoins are not yield-bearing for token holders, Tether simply keeps all interest income itself as corporate profit.

The company claims to hold over $112 billion worth of interest-bearing assets yet pays $0 in interest to tokenholders. Needless to say, that provides plenty of profit for Tether to invest in the bitcoin mining industry.

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