Tether executives have recently made headlines with their acquisition of a Bitcoin mining arm, an intriguing transaction that has sparked interest across the crypto community. Northern Data, a German AI and data center company, sold its subsidiary, Peak Mining, for a substantial sum of up to $200 million. This sale was made to companies directly linked to Tether’s top leadership, a situation that raises questions about transparency and corporate governance.
Inside the Tether Executives’ Acquisition
The companies purchasing Peak Mining—Highland Group Mining Inc., Appalachian Energy LLC, and 2750418 Alberta ULC—are reportedly under the influence of Tether’s top figures. British Virgin Islands records reveal that Highland Group Mining is controlled by Giancarlo Devasini, Tether’s co-founder and chairman, along with Paolo Ardoino, the CEO. Meanwhile, Canadian documents identify Devasini as the sole director of Alberta ULC. However, the ownership of Appalachian Energy LLC remains less clear, as no directors have been publicly listed.
Northern Data’s Strategic Move
The sale of Peak Mining marks Northern Data’s second attempt to divest the entity to Giancarlo Devasini-related businesses. Initially, in August, a nonbinding agreement was announced to sell to Elektron Energy for $235 million, yet this deal did not materialize. Instead, the transaction proceeded at a reduced price to the aforementioned trio of companies.
The timing of the sale is crucial. Shortly after the announcement, Rumble, a video platform in which Tether holds a significant stake, agreed to purchase Northern Data for approximately $767 million. Tether committed to acquiring $150 million in GPU services and entered into a separate $100 million advertising agreement. Additionally, Tether extended a €610 million loan to Northern Data, half of which will convert into Rumble stock upon the deal’s closure.
Regulatory Scrutiny and Challenges
This acquisition unfolds amidst ongoing regulatory scrutiny of Northern Data. European authorities conducted raids in September as part of an investigation into alleged large-scale VAT fraud. Northern Data has denied any wrongdoing, attributing the allegations to misunderstandings over tax treatments related to their GPU cloud services and crypto mining operations.
Previously, a lawsuit by former Northern Data U.S. executives accused the company of significant financial improprieties, including tax evasion. The lawsuit was voluntarily dismissed, although the reasons remain undisclosed. The legal challenges have added layers of complexity to the ongoing narrative surrounding Northern Data and its transactions.
Tether’s Ambitions in Bitcoin Mining
Tether, with a 54% ownership stake in Northern Data, has been actively expanding its Bitcoin mining capabilities. CEO Ardoino aims for Tether to become the largest Bitcoin miner globally by 2025, highlighting the need to secure over $10 billion in Bitcoin holdings. The company has invested over $2 billion in mining infrastructure across various countries, including Uruguay and El Salvador.
Despite its ambitious plans, Tether faces its own challenges. Recently, S&P Global Ratings downgraded the stability assessment of Tether’s USDT due to concerns that its Bitcoin exposure exceeds its reserve buffer, potentially leaving USDT undercollateralized during market downturns.
The developments between Tether executives and Northern Data highlight the intricate and sometimes opaque nature of corporate deals within the crypto space. These transactions not only influence market dynamics but also invite scrutiny from regulatory bodies, emphasizing the importance of transparency and accountability in the industry.
