Tether Set to Invest $500M in Bitcoin Mining
Tether Reveals Its Entry Into Crypto Mining
Stablecoin issuer Tether has announced its plan to invest in Bitcoin mining in 2024. The company behind the largest stablecoin, USDT, said it would inject $500 million into its new area of interest. In the announcement, Tether said its investment strategy involved setting up and running its own mining farms and purchasing shares of well-known mining firms.
Moreover, the USDT issuer said it was committed to helping struggling Bitcoin miners keep their businesses afloat. To prove its commitment, Tether revealed that it had given mining company Northern Data AG a $600 million loan.
Earlier this year, Tether’s former CEO, Jean-Louis van der Velde, said the company, which is mainly known for issuing and managing USDT, would diversify its business model over the coming months.
Crypto Mining Explained
For starters, crypto mining is the process of approving transactions on a certain blockchain using specialized equipment. This also helps to keep the network secure. Miners, those who validate transactions, are rewarded with newly minted coins for their contribution.
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However, Bitcoin miners have been criticized in recent years for consuming a lot of energy. Accrding to the latest statistics, Bitcoin mining’s annual consumption is about 127 TWh (terawatt-hours). This figure has surpassed the energy usage in countries like Norway. Moreover, Bitcoin miners have been accused of polluting the environment. In the US, it’s estimated that cryptocurrency mining emits about 40 million tons of carbon dioxide. By comparison, vehicles produce 45 million tons of gas emissions per year.
Tether to Set Up Mining Facilities in Three Countries
Meanwhile, Tether says it has chosen Paraguay, El Salvador, and Uruguay as the locations to set up its mining facilities. Each facility will have a capacity of about 60 megawatts, with the stablecoin issuer aiming to achieve a 1% share of the entire Blockchain’s computing power.
But with Bitcoin halving set to happen in 2024, Tether could see a reduction in revenue if it fails to increase its mining capacity. That’s because, after the halving event, mining rewards will be reduced by half. So, instead of earning 6.25 BTC per block, Tether and other miners will receive 3.125 BTC.
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