The deal is part of a trend of bitcoin miners looking to the AI boom for new sources of revenue, as GPUs become less useful for ethereum mining due to the cryptocurrency's energy-saving overhaul. However, the deal has been described as messy and convoluted, with Northern Data's CEO struggling to explain why Tether purchased the chips instead of Northern Data, the structure of the deal, or how much the stablecoin company would own of his business after the deal.
Key takeaways:
- Tether Group, the company behind the $86.5 billion stablecoin Tether, has spent $420 million on 10,000 H100 GPUs from Nvidia. This deal will give it a 20% stake in German bitcoin miner Northern Data, which plans to rent the chips to AI startups.
- The deal could make Northern Data the largest cloud GPU operator in Europe outside of major cloud computing companies like Amazon, Microsoft Azure, and Oracle. Northern Data CEO Aroosh Thillainathan sees this as a great opportunity due to the current shortage of GPUs.
- Tether's investment in GPUs and cloud computing via Northern Data surpasses even some nations. For example, the British government had set aside a $120 million budget for GPUs, while Saudi Arabia reportedly bought around 3,000 of Nvidia’s H100.
- Despite Tether's massive investment, the deal is complex and involves the purchase of GPUs through an Irish shell company, Damoon. Northern Data will take a 70% stake in Damoon in return for shares equivalent to 20% of its ownership. The total cost of the deal remains unclear.