Tether Group, the cryptocurrency powerhouse responsible for the $86.5 billion market capitalization of Tether, has taken a significant step into the cloud GPU domain. They’ve allocated a substantial sum of $420 million to acquire 10,000 Nvidia H100 GPUs, solidifying a 20% ownership stake in the contentious Bitcoin mining entity, Northern Data.
Tether Embraces a Fresh AI Approach with Nvidia Technology.
Nvidia’s H100, priced at $40,000 per unit, stands as one of the most coveted assets in the technology industry today. AI startups are in a race to obtain these GPUs, as they are the preferred processors for companies specializing in data analysis.
Tether’s investment in this field, achieved through the procurement of these GPUs, surpasses the economic power of entire nations.
This agreement represents a significant departure for the Tether Group, given that its stablecoin is designed to maintain a 1:1 backing with US dollars for each of the 86.4 billion USDT tokens currently in circulation. In 2021, the company faced a $41 million fine from the CFTC for making false claims of full dollar backing.
However, the transaction is not as straightforward as it may initially appear. Tether will acquire the GPUs through an Irish shell company named Damoon. In return for shares equivalent to 20% of its ownership, Northern Data will subsequently obtain a 70% stake in Damoon.
Aroosh Thillainathan, the CEO of Northern Data, expressed enthusiasm for the deal, recognizing it as a valuable opportunity to access 2% of the highly sought-after GPU allocation, which is currently in short supply.
This strategic maneuver has the potential to position Northern Data as a prominent cloud GPU operator in Europe, excluding major players such as Amazon, Microsoft Azure, and Oracle.
Thriving GPU Industry
Tether intends to lease these chips to AI startups, following the approach of mining companies such as Hive, Crusoe, and Hut 8. These companies have repurposed GPUs for rental to startups requiring additional computational capabilities.
Initially utilized for Ethereum mining, these chips became obsolete following the protocol’s transition to a proof-of-stake consensus mechanism in 2022.
The GPU market has also experienced a surge in demand owing to the AI boom. Nvidia’s CEO, Jensen Huang, remarked that a new era in computing has shifted from general-purpose to accelerated computing and generative AI. Huang conveyed this during an interview with GamesBeat, emphasizing the transformative nature of these advancements.
Nvidia has leveraged the enthusiasm surrounding AI to its advantage. The company announced a remarkable revenue of $13.51 billion, marking a substantial increase of 101% compared to the previous year and an 88% surge from the preceding quarter.
Tether’s foray into the realm of AI via its investment in Nvidia’s GPUs indicates its inclination towards diversification into fresh sectors. Additionally, it underscores the burgeoning influence and intersection of the cryptocurrency and AI domains