Northern Data, the Tether-owned AI computing firm, has announced that it is considering leaving the bitcoin mining business just days after announcing it is on course to deliver 7.9 exahashes per second (EH/s) this year. 

On October 17, Northern Data announced its Q3 financial results, noting in a press release that its mining business was still on track to open its new Corpus Christi Texas location — critical for its hash rate goal — soon. 

However, four days later, the company revealed that it was exploring a “potential transaction of its mining business,” specifically noting that it was “exploring the divestment of its heritage crypto mining business, Peak Mining.” As a result, Northern Data would become “a pure-play AI Solutions business.” 

Northern Data states that proceeds from this transaction would be reinvested in its AI-focused business lines.

Read more: Tether: Ten years, 100,000,000,000 USDT, and still no audit

This decision may be driven by the declining proportion of Northern Data’s revenue coming from mining. This fell from 74% of its revenue at the beginning of 2024 to only 20% for Q3. Additionally, the revenue for mining has fallen from 22 million euros in Q1 to only 12 million euros in Q3. 

While Northern Data considers this pivot, Tether does have other investments in the bitcoin mining space, including Bitdeer, Volcano Energy, and 2040 Energy.

Northern Data has been involved in a dispute with former executives over claimed securities fraud. The business maintains that no inappropriate behavior occurred. 

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The post Tether-owned Northern Data considers ditching bitcoin mining appeared first on Protos.

As Tether has grown exponentially over the years, it has also altered the composition of what provides backing for every one of its tokens. In some quarters, this has been perceived as positive, particularly the fact that the company has moved away from commercial paper of unknown quality into US treasuries and repo markets.

However, Tether also has a variety of ‘other investments’ — many of which have been shared publicly on its Crunchbase profile.

Celsius Network

Tether’s first investment was in the now-defunct crypto lending platform Celsius. Run by Alex Mashinsky and his cronies, the lending company declared bankruptcy after collapsing under the weight of its own poorly enacted market manipulation and fraud.

Tether made an announcement in 2022 that stated, “Tether’s portfolio does include an investment in Celsius,” but added that the investment was actually for shareholder equity and that there was “no correlation between this investment and Tether’s own reserves or stability.”

Tether also revealed a loan provided to Celsius in the announcement. Celsius raised nearly $1 billion in funding before it collapsed and Tether is listed as one of only a handful of lead investors.

Exordium

Exordium is the web3 gaming company created by the former CSO of Blockstream, Samson Mow. Exordium’s investors include Disrupt Ventures — a fellow investor in Celsius Network. Their only IP is a video game called Infinite Fleet, which is a Star Citizen-esque game that incorporates its own token. The company has only raised $5.4 million so the amount Tether put into the company is minimal, even as lead investor.

Bitrefill

Bitrefill is an early website devoted to selling gift cards and other products for cryptocurrency. Investors include Litecoin creator Charlie Lee, Tim Draper’s Draper Associates, and Fulgur Ventures. Similar to Exordium, Bitrefill has only raised $9.5 million, a minuscule amount from Tether’s reserves.

NAKA

NAKA is a financial services company almost exclusively working with individuals and organizations involved with crypto. The CEO and co-founder of NAKA is Dejan Roljic, a Slovenian who’s been involved with crypto for many years now — including a 2018 ICO called Eligma, which raised $7.2 million.

While Eligma had bold goals of merchant adoption, AI-driven item discovery, and other absurd claims, it appears to simply do software development work now. Meanwhile, NAKA has raised nearly $50 million, with over $20 million of that coming from Tether and Bitfinex.

Volcano Energy

With only one investor — Tether — Volcano Energy, an El Salvadoran geothermal energy company with support from the Bukele government, looks to have raised approximately $250 million from Tether. This makes it one of Tether’s larger investments, which makes a lot of sense considering its close ties to Nayib Bukele and the Salvadoran government.

The company aims to take advantage of the volcanic hotspots in El Salvador to mine bitcoin, with some miners beginning to run in October of last year — there have been no real updates since. Laughably, the CEO, CSO, and chairman (well-known Bitcoin maximalist and former Russian TV star Max Keiser) have no experience in the energy industry — though help from numerous international conglomerates, including ChinaPower, will likely help with that.

In a reply to Ethereum World News, a spokesperson for Tether apparently claimed that the company’s reserves wouldn’t be used for this investment, but how that would be possible is unclear.

Read more: Explained: El Salvador’s contentious bitcoin-backed Volcano Bonds

Northern Data Group

Northern Data is a bitcoin mining company that has also pivoted to trying to use its energy contracts and data centers for artificial intelligence. It has been reported that Tether owns the majority of this firm. Former executives have alleged the firm engaged in securities fraud and tax evasion.

Northern Data is reportedly considering an IPO of its AI unit, though Northern Data stated it could neither confirm or deny those rumors.

Read more: Tether-owned Northern Data accused of fraud by former execs

Academy of Digital Industries

A Georgian education company that received almost no money from Tether, with the stablecoin only investing $40,000 in it according to Crunchbase. Tether appears to have used this investment as more of a PR coup than anything else: the minimal investment allowed it to post an announcement stating it was supporting blockchain and cryptocurrency education globally, while also advertising ‘Mastering the Blockchain’ courses that were being held at the conference it co-hosts in Lugano.

Tickets to the conference range in price from $170 to $1,700.

Oobit

A Lithuanian-based company that was founded by Israelis, Oobit raised $3 million in 2020, followed by a $25 million raise in February of this year. Investors in the company include big names in the crypto industry, from Tether to Solana co-founder Anatoly Yakovenko and 468 Capital.

The company is looking to make crypto easier for both consumers and merchants to use by converting it to cash as soon as it’s transferred to a merchant. This is likely something that Tether plans to help with and benefit from.

Read more: Is Tether becoming Bitcoin’s most influential miner?

Satellogic

Satellogic is a Caribbean-Uruguayan company that has gotten into the satellite launch business. Between 2013 and 2020, launches for the company almost exclusively took place in China and Russia, but since then, the company has been working with SpaceX to launch from the US.

Additionally, Satellogic laid off workers last year, lowered expectations around the number of forthcoming launches, and sought out new investors because of financial difficulties. After this announcement, Tether came to the rescue by allowing the company to essentially borrow money.

The company currently trades on the Nasdaq exchange for around a dollar.

CityPay.io

CityPay.io is a Georgian company specializing in crypto payments. Of the $2.8 million that it has raised, $2.1 million has come from Tether.

The drive to bring more users to Tether in countries with higher poverty and unemployment than Western nations has likely led to it prioritizing investment in CityPay.io. Georgia has not seen an unemployment rate below 10% since the early ’90s and its poverty rate hovers persistently around 15-20%.

Bitdeer Technologies Group

Run by (in)famous early bitcoin miner Jihan Wu, who came on board as CEO of the company in January of this year, Bitdeer Technologies Group is a NASDAQ-listed cryptocurrency mining group.

Tether invested an impressive $100 million into the company a few months ago, pouring many times more value into it than it had ever received before. Unfortunately, since that raise, the publicly traded company has remained incredibly volatile and its stock has traded anywhere between $14 and $3.20 over the past year.

XREX

XREX identifies as ‘a blockchain-enabled financial institution’ that offers ‘enterprise-grade banking to SMBs and novice-friendly financial services to individuals globally.’ Tether invested $18.75 million in the firm, with the announcement stating it hopes this partnership will “facilitate USDT-based cross-border payments in emerging markets.”

Further, the announcement highlights that XREX can apparently lead to new “solutions to detect and prevent illicit use of stablecoins.”

In sum, these investments show how Tether has expanded its role in the ecosystem, funding a variety of different projects across many different verticals, all while receiving fewer audits than FTX.

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The post Let’s talk about Tether’s investments appeared first on Protos.

In late 2023, Tether, the world’s largest stablecoin, announced it was taking a significant stake in Northern Data, a firm that principally focuses on Bitcoin mining but has since expanded into artificial intelligence.

Since then, former executives of Northern Data’s North American subsidiary have filed a lawsuit against Northern Data, alleging securities fraud and tax evasion, as well as whistleblower retaliation. 

Joshua Porter, the former CEO and president of Northern Data US, the company’s North American subsidiary, and Gulsen Kama, the former chief financial officer of Northern Data US, filed the lawsuit.

The lawsuit alleges that Northern Data regularly misrepresented its financial situation to investors, even as its executives, including Porter and Kama, raised concerns about the solvency of the parent company. These issues came to a head in early 2023 when KPMG insisted on performing a liquidity forecast before signing off on its audit.

Kama felt that the financials were being misrepresented to KPMG. As the engagement with KPMG kept being delayed, Aroosh Thillainathan, the founder and CEO of the parent company, allegedly insisted that the firm find a new auditor and suggested it did not matter who the auditor was, as people didn’t care. 

Thillainathan also allegedly told Kama that the Legal and Finance departments were acting as “road blockers,” interfering with his ability to find new opportunities for the firm. He insisted that these departments were meant to “execute deals that were negotiated… no questions asked.”

Furthermore, the lawsuit alleges that Northern Data was improperly managing the revenue of its North American subsidiary, described in the complaint as ‘committing tax evasion to the tune of potentially tens of millions of dollars.’ Porter allegedly insisted that “Northern Data should recognize its profits in the United States (and thus pay taxes thereon).” However, management disagreed.

Read more: Tether teases new assets as old ones are forgotten

Both Porter and Kama also allege that they were fired from their positions as retaliation for raising these issues. 

Financial Times reporting claims that Tether is the majority owner of Northern Data, owning 51% of the stock. 

The allegations in this lawsuit echo earlier issues raised by Germany’s financial regulator BaFin in 2021, which alleged that Northern Data had engaged in market manipulation related to misrepresentations in 2019. BaFin had referred the complaint for potential criminal prosecution, but prosecutors decided not to pursue the case.

A Northern Data spokesperson provided the following comment after publication: “It is no coincidence that these allegations from disgruntled former employees are being publicized just days after unconfirmed media speculation that the company is evaluating a potential capital markets event. The allegations are clearly financially motivated and completely baseless.  We will contest them vigorously. Integrity is paramount to Northern Data and its leadership. As a publicly listed company we have comprehensive policies and procedures to ensure the accuracy and credibility of our financial reporting. Our 2022 accounts received an unqualified audit opinion, and we will release our 2023 audited financials as scheduled. We are well capitalized and have a very robust growth plan, with revenue expected to more than triple in 2024 – a clear demonstration of Northern Data’s stability and strong investment strategy.”

Protos has contacted Tether for comment but had no response at time of publication.

Update 2024-07-08 15:12 UTC: Added comment from Northern Data.

Update 2024-10-29 15:14 UTC: The lawsuit described in this piece has since been dismissed, and declarations from Porter and Kama provided by a communications firm associated with Northern Data appear to show both executives recanting their previous claim they were fired for whistleblowing.

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