- Tether Group invests a staggering $420 million in Nvidia’s H100 GPUs, securing a 20% stake in German-listed bitcoin miner, Northern Data.
- Northern Data aims to leverage these GPUs to rent to AI startups, capitalizing on the growing demand for data processing in AI industries.
Stablecoin Tether’s Bold Dive into the GPU Market
Tether Group, primarily recognized for its $86.5 billion stablecoin, has taken an unexpected leap into the technology arena. Teaming up with Northern Data, a German bitcoin miner, Tether is making strides to secure a strong position as a major cloud GPU player, specifically focusing on the cutting-edge AI chips from Nvidia.
It’s worth noting that Nvidia’s H100, priced at an astounding $40,000 per unit, has become an essential asset in the tech space. Artificial intelligence companies, with their ever-increasing need to process colossal data sets, are fiercely competing to secure these graphics processing units. This race has now seen an unexpected participant in the form of Tether Group. With an investment totaling $420 million, they’ve procured 10,000 H100 GPUs. This strategic move also hands them a 20% equity in Northern Data.
GPU’s New Role in the AI Ecosystem
The prevailing trend among bitcoin miners, as observed from Northern Data’s strategies, is to tap into the AI boom as an alternative revenue stream. While these GPUs have become redundant for ethereum mining due to recent changes in its architecture, they hold immense value for AI-oriented tasks. Transitioning from cryptocurrency to AI is not an isolated strategy, as evident from New Jersey-based startup Coreweave. They shifted gears from utilizing GPUs for ethereum calculations to supporting major AI projects, including collaborations with Microsoft.
Northern Data’s CEO, Aroosh Thillainathan, underscores this venture as a significant opportunity. With an escalating demand for GPUs, and supply chains being stretched thin, securing such a large allocation sets them on a promising path. Moreover, this deal might position Northern Data as Europe’s premier cloud GPU operator, a rank currently occupied by giants such as Amazon, Microsoft Azure, and Oracle.
Deal Intricacies and Tether’s Broader Vision
The nature of the deal between Tether Group and Northern Data is intricate. Tether will purchase the GPUs via an intermediary, the Irish shell company Damoon, and Northern Data will subsequently obtain a 70% stake in this company, compensated by offering shares that equate to 20% of its own ownership. The specifics of costs and final ownership percentages remain ambiguous, primarily due to the rapid and competitive nature of GPU acquisitions.
A glance into Northern Data’s past reveals its penchant for using shell entities, often associated with its stakeholders, to purchase bitcoin mining equipment. Their association with controversial entities and the somewhat fluctuating financials might be seen as potential red flags for some.
For Tether Group, this collaboration signifies a strategic deviation from their usual operations. The company has been embroiled in controversies in recent years, especially concerning the backing and stability of its stablecoin. Despite these challenges, Tether continues to diversify its investment portfolio, evidenced by its ventures into bitcoin mining operations and other tech startups.
Given the evolving landscape of technology and finance, collaborations like these between crypto entities and tech firms might become the norm, paving the way for uncharted innovations and synergies.