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In the first quarter, Tether made a profit of $4.5 billion and entered the fields of Bitcoin mining, AI, and education.

In the first quarter, Tether made a profit of $4.5 billion and entered the fields of Bitcoin mining, AI, and education.

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ChaincatcherChaincatcher2024/05/10 10:49
By:原标题:《First quarter profit of US$4.5 billion, Tether enters Bitcoin mining, AI and education》

Tether's stablecoin USDT has surged to a market capitalization of $111 billion, which is three times that of its closest competitor, Circle's USDC.

Original Title: "First quarter profit of US$4.5 billion, Tether enters Bitcoin mining, AI and education"

Author: Nina Bambysheva, Forbes

Translation: Luffy, Foresight News

 

During the time when FTX and other industry giants were struggling, most areas of the cryptocurrency world were in collapse. However, amidst this storm, Tether stood out, showing a thriving trend.

Tether's stablecoin USDT market cap soared to $111 billion, three times that of its closest competitor, USDC issued by Circle based in Boston. Due to the higher interest rates of US Treasury bonds (which make up most of the reserves supporting its stablecoin), Tether's business is enviable as its source of funds is essentially free. Unlike traditional banks, customers depositing hard currency into Tether in exchange for USDT do not earn any interest.

In just the first quarter of 2024, Tether reported unaudited company "financial performance" of $45 billion, with net assets of $114 billion. In 2023, the company reported a net profit of $6.2 billion, likely making it the most profitable company in the cryptocurrency field today. In comparison, the largest US cryptocurrency exchange Coinbase had a revenue of $3.1 billion and a profit of $95 million in 2023, with a net income of $1.2 billion in the first quarter of 2024, mainly due to the rise in cryptocurrency prices. Thanks to the partnership with Circle, around 20% of Coinbase's 2023 profit came from interest earned from the reserves supporting the stablecoin USDC.

With ample funds, Tether is now focusing on growth beyond stablecoins. Last month, the company based in the British Virgin Islands announced a strategic reorganization, opening three new departments in addition to stablecoins: Bitcoin mining, artificial intelligence, and education.

In the first quarter, Tether made a profit of $4.5 billion and entered the fields of Bitcoin mining, AI, and education. image 0

Paolo Ardoino, CEO of Tether

Tether's new CEO Paolo Ardoino stated, "The concept of cryptocurrencies eliminating intermediaries can be applied to many other fields," as he has been the company's Chief Technology Officer and spokesperson since 2017.

Tether's expansion plans are not just cautious business diversification but also a philosophical issue. "We believe that 90% or even more of technology is built for the best-case scenario, but no one builds technology for the worst-case scenario," said 40-year-old Ardoino. "If a disaster happens, I'm not saying it will happen for sure, but anything can happen, and we are not prepared for it."

Cryptocurrency historians will remember that Bitcoin was created by Satoshi Nakamoto in response to the 2008 financial crisis when there was widespread doubt about the stability and reliability of the existing global financial system. Ardoino believes that Tether will play a crucial role in creating what he calls sovereign technology that empowers people.

Ardoino said, "Having elastic money is a good thing, but if you only have elastic money and everything else is centralized, then it will be destroyed quickly. One of our mottos is 'Built for Doomsday'."

Paolo Ardoino grew up on a family farm in northern Italy. He started programming at the age of eight and later studied computer science and mathematics at the University of Genoa. After graduating in 2008, Ardoino became a military project researcher at the electronics and information technology company Selex Communications, focusing on high-availability elastic networks and encryption technology.

To explore opportunities outside Italy, he moved to London around 2013 and soon founded Fincluster, a startup that built cloud-based financial applications for consultants, fund managers, and institutions in London, Milan, and Lugano. In October 2014, one of his clients introduced him to Giancarlo Devasini, Chief Financial Officer of Tether and its sister cryptocurrency exchange Bitfinex. Devansini invited Ardoino to help expand the Bitfinex platform, which was becoming increasingly popular.

Ardoino was soon appointed as the technical lead for both companies, and with Devasini and CEO Jean-Louis van der Velde operating discreetly, Ardoino became the face of Tether. According to Forbes' billionaire rankings, these three, along with Chief Legal Officer Stuart Hoegner, later became billionaires.

In December last year, Ardoino officially took over Tether while retaining his position as Chief Technology Officer of Bitfinex. He is also responsible for the strategic direction of Holepunch, a technology platform that allows developers to create serverless applications, launched by Tether, Bitfinex, and infrastructure platform Hypercore.

Ardoino stated that Tether's ownership structure remains unchanged. Chief Financial Officer Devasini is still the company's largest shareholder, and former CEO van der Velde remains involved as an advisor. However, this has not stopped Ardoino from planning a new path for Tether. Last month, the company announced a reorganization into four departments to develop its expanding business focus:

  • Finance Department, responsible for managing USDT and overseeing the upcoming digital asset tokenization platform;

  • Data Department, responsible for strategic investments in emerging technologies, including artificial intelligence and peer-to-peer platforms;

  • Computing Power Department, focusing on Bitcoin mining and energy-related businesses;

  • Education Department, supporting education and leadership programs.

Tether has made progress in each area. Last year, the stablecoin giant participated in a $1 billion investment in a Bitcoin mining operation called "Volcano Energy" in El Salvador, powered by solar and wind energy. Tether also established its own Bitcoin mining facility in Uruguay. In September last year, Tether revealed that it spent $420 million to purchase 10,000 Nvidia H100 graphics processors from the German-listed Bitcoin miner Northern Data, which are typically used by AI companies looking to process large amounts of data. In exchange, Tether received a 20% stake in the company, which plans to rent out these chips to AI startups. Another novel investment by Tether was in April when it acquired a majority stake in Blackrock Neurotech for $200 million, a biotech company based in Salt Lake City that manufactures brain implant chips designed to enable people with neurological disorders or paralysis to "eat, drink, operate robotic arms, and send emails through thought."

According to Ardoino, Tether doubled its staff last year to about 100 people, and he personally interviews every applicant. "I don't want yes-men," Ardoino said. "I want people to tell me what they think about Tether and what we've done right and wrong."

In terms of Bitcoin mining, Ardoino's goal is to capture a 5% market share, which would place it among the top global miners. "If you think Bitcoin is the ultimate form of currency, built for the end of the world, then you wouldn't want most of Bitcoin mining concentrated in one country. So, the way to achieve this goal is to invest in different regions," he explained. "We start from South America and plan to expand to different regions globally to ensure the decentralization of Bitcoin mining."

"When it comes to the competition in Bitcoin mining, the key is how much capital you can invest. They have already invested about $500 million. With that kind of funding, you can go a long way," said HC Wainwright analyst Kevin Dede. Adam Sullivan, CEO of publicly traded Core Scientific, added, "They are now the largest investors in the Bitcoin mining field. This is natural for them as it is the real driver of their business growth." Sullivan noted that with Tether holding a large amount of digital assets, the recent surge in Bitcoin prices has boosted their profits. If Bitcoin prices continue to rise, mining Bitcoin will expand profits.

However, despite Tether's significant progress in Bitcoin mining, venturing into the field of artificial intelligence will pose greater challenges.

The challenge. In addition to reaching deals with companies like Northern Data, Tether is also seeking internal development, building large-scale models, and integrating artificial intelligence features into existing products. The recruitment information on the Tether website lists positions such as AI engineers and AI research directors. "I believe that artificial intelligence can play a greater role and will not be influenced by the political biases of the few elite running the world's largest AI projects," Ardoino said. He is referring to most companies currently driving AI development, including Microsoft, OpenAI, and Google. "We believe that AI should eliminate intermediaries, just as currency should," he added. Radical Ventures partner Rob Toews expressed skepticism about Tether's foray into AI. "Acquiring GPUs and renting them to AI companies is a more accessible strategy, but I find it hard to imagine Tether becoming a reliable competitor in building multimodal AI models." Tether will offer courses and workshops covering blockchain technology, AI, coding, and design through its education department. The company has already collaborated on various initiatives with the Georgian Digital Industry Academy and Thailand's largest local exchange, Bitkub. Ardoino stated, "Education is the cornerstone of this journey and is crucial for promoting economic prosperity and sustainable development." Given the chaotic history of cryptocurrencies and Tether's lack of audited financial statements by registered accountants, we have reasons to be concerned about the source of the company's new investments. According to the company's financial evidence, most of the $4.52 billion profit in the first quarter came from the company's Bitcoin and gold positions. Ardoino insists that Tether's investments come from its profits, not its customer reserves. Austin Campbell, a part-time professor at the Columbia Business School and advisor to blockchain companies, said, "If people think they are starting to use customer reserves to invest in these things, Tether could quickly decline." "I have always said that the problem with Tether is not how much they hold now, but how much they might hold in the future because they are not restricted." Campbell also warned that Tether's dominant position in stablecoins is far from guaranteed in the long term: "With the introduction of stablecoin regulations and regulatory normalization, Tether will have to start complying with these regulations locally or leave these jurisdictions." Tether's dominant position has already been challenged. According to DefiLlama data, although USDT still holds a 69% share in the stablecoin market, its transaction volume is relatively lagging. According to analysis by payment giant Visa and enterprise blockchain data platform Allium Labs, Circle's USDC had a transaction volume of 178.6 million transactions in April 2024, surpassing USDT's 173.9 million transactions. Furthermore, a recent report from Standard & Poor's Global Ratings shows that the new bipartisan stablecoin bill proposed by Senators R-Wyo and DN.Y. in April limits the issuance of stablecoins by institutions without banking licenses to a maximum of $10 billion, which may stimulate competition from traditional banks. Ardoino stated, "We believe all these investments are crucial for Tether... We believe these investments can change the lives of people in emerging markets and developing countries. We hope to be leaders in human evolution."
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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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