Tether Group, the crypto titan behind the $86.5 billion market cap stablecoin Tether, has made a massive leap into the cloud GPU scene.
The firm has invested a whopping $420 million on 10,000 Nvidia H100 GPUs, securing a 20% stake in the controversial Bitcoin miner Northern Data.
Tether Adapts New AI Strategy With Nvidia Gear
At $40,000 per chip, Nvidia’s H100 is currently one of the most sought-after commodities in the tech sector. AI startups are scrambling to secure these GPUs, which are the also processors of choice for data-crunching companies.
Tether’s investment in this arena, through the acquisition of these GPUs, outstrips even some entire nations.
This deal is a significant departure for Tether Group, whose stablecoin is meant to be backed 1:1 with US dollars for each of the 86.4 billion USDT currently in circulation. The firm was fined $41 million by the CFTC in 2021 for falsely claiming that it was fully backed in dollars
The transaction is not as straightforward as it seems. Tether will buy the GPUs through an Irish shell company called Damoon. Northern Data will subsequently gain a 70% stake in Damoon in return for shares equivalent to 20% of its ownership.
Northern Data CEO Aroosh Thillainathan expressed that the deal was a great opportunity to have 2% of the hottest GPU allocation available as everyone is running short on GPUs.
This strategic move could potentially elevate Northern Data to become Europe’s largest cloud GPU operator, excluding major players like Amazon, Microsoft Azure, and Oracle.
Booming GPU Market
Tether plans to rent the chips to AI startups, mirroring the strategy of miners like Hive, Crusoe, and Hut 8. These firms have also converted GPUs to rent them to startups who need the extra computing power.
These chips were once used for Ethereum mining, but became obsolete after the protocol’s 2022 ‘Merge.’
This move transitioned it to a proof-of-stake consensus.
The GPU market has also seen a surge due to the AI boom. Nvidia’s CEO Jensen Huang stated that a new computing era has transitioned from general-purpose to accelerated computing and generative AI. Huang told GamesBeat:
Data center, enterprise computing, as you know, is muted. But generative AI is doing incredibly. I think it’s very focused on generative AI.
Tether’s move into the AI space through its investment in Nvidia’s GPUs signals its interest in diversifying into new sectors. It also showcases the growing influence and convergence of the crypto and AI industries.
Top crypto platforms in the US | December 2023
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