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Tether Group, the company behind popular stablecoin Tether, is making a huge new bet - and it isn’t on crypto.
Instead, they are joining in on the AI GPU craze.
What’s happening:
- Tether is one of the world’s largest stable coins with $86B in assets
- They have just announced a $400M investment to secure hardware for generative AI computing in connection with German bitcoin miner Northern Data
- The purpose of the new capital is to secure 10,000 Nvidia (NASDAQ: NVDA) H100 GPUs, one of the most coveted GPUs globally for AI compute
- Northern Data (Frankfurt: NB2.F) is a one of many cloud computing companies who previously were focused on Bitcoin but are now expanding into providing high performance computing for generative AI startups
Why it matters:
- Tether Group is a notable capital allocator, previously being involved in the highly unique $1B round to build the world’s largest Bitcoin mining operation in El Salvador
- Seeing Tether Group push into artificial intelligence is yet another signal that the demand for cloud computing is rapidly accelerating for startups focused on AI
- Northern Data could become one of the largest cloud computing companies in all of Europe after this enormous purchase of GPUs
Going deeper:
- This investment by Tether Group is unprecedented in terms of scale, dwarfing the amount of GPUs of what entire countries such as Britain and Saudi Arabia have purchased
- Northern Data previously acquired a Bitcoin mining company owned by notable crypto company Block One and already owns two high performance cloud computing companies
The fine print:
- Tether Group’s involvement is complicated, as they are purchasing the GPUs through a Ireland based shell company that Northern Data has an ownership interest in
- Further, Northern Data has the right to acquire all of the shell company, but there are not publicly announced details around that
- It’s not clear as of yet why Tether Group would not be investing in equity in Northern Data, whose valuation is approximately €500M currently given the size of their investment
