Tether Invests Additional $32 Million in Bitcoin Miner Bitdeer During Market Slump

TLDR

• Tether has purchased an additional $32 million in Bitdeer shares as Bitcoin mining companies face market slumps
• Tether has increased its stake in Bitdeer to over 21% of outstanding shares
• Bitcoin miners collectively lost 25% ($6 billion) of market cap in March according to JP Morgan
• Miners have been selling Bitcoin holdings to raise funds as prices remain below January’s record high
• Bitdeer is pursuing vertical integration from chip production to energy management with Tether’s backing

Stablecoin giant Tether has purchased an additional $32 million worth of shares in Bitcoin mining company Bitdeer this month, according to an SEC filing. This acquisition comes at a time when Bitcoin miners are facing market challenges due to sideways cryptocurrency prices and increased mining difficulty.

This latest investment builds on Tether’s growing stake in Bitdeer. Last month, filings showed that Tether had increased its ownership to 21.4% of Bitdeer’s outstanding shares through its subsidiaries Tether International and Tether Investments.

The timing of Tether’s purchase coincides with a downturn in the Bitcoin mining sector. Nasdaq-listed Bitdeer (BTDR) has seen its share price drop to $7.62, representing a nearly 67% decrease year-to-date.

Bitdeer is not alone in this slump. MARA Holdings, the largest miner by market capitalization, has experienced a 26% decline in share price this year. Riot Platforms shares have fallen over 38% during the same period.

Mining Industry Challenges

According to investment bank JP Morgan, March was the worst month on record for 14 top public Bitcoin mining companies. These firms collectively lost 25% of their market value, equivalent to about $6 billion.

The struggles facing miners stem from multiple factors. Bitcoin’s price has failed to maintain momentum after reaching an all-time high near $109,000 in January. The cryptocurrency was recently trading at around $85,000, up 7% over the past week but still well below its peak.

Rising mining difficulty has also placed pressure on operations. This increase makes it harder for miners to recover their costs, forcing many to look for additional funding sources.

Data from CryptoQuant showed that miners have been selling their Bitcoin holdings at an increased rate. On April 7, miners sold a total of 15,000 BTC—the third-largest daily outflow this year—worth approximately $1.12 billion.

Tether’s Growing Mining Focus

Tether’s investment strategy indicates a broader interest in the Bitcoin mining space beyond its core stablecoin business. On Monday, the company announced it would support Bitcoin mining pool Ocean by providing hash rate to help mine blocks and collect BTC rewards.

Tether is best known as the company behind USDT, the largest stablecoin and third-largest cryptocurrency by market capitalization. USDT is designed to maintain a stable value backed by dollars, treasuries, and other investments.

The company has faced regulatory scrutiny in the past. In February 2021, Tether agreed to stop doing business in New York following a two-year state attorney general investigation that found the company had “made false statements about the backing” of its stablecoin.

Tether has since pointed to quarterly attestations and transparency reports to prove its cryptocurrency is properly backed. The firm told Decrypt it is working with a Big Four accounting firm to obtain an independent audit.

Bitdeer’s Vertical Integration Strategy

Bitdeer, founded by Jihan Wu, is pursuing a strategy of vertical integration in the Bitcoin mining sector. The company aims to control all aspects of its operations, from producing mining chips to managing its own power sources.

Recent test results for Bitdeer’s SEALMINER A3 chip reported performance below 10 J/TH in laboratory conditions. This development aligns with the company’s focus on enhancing mining efficiency and optimizing energy usage.

Tether’s investment in Bitdeer is not new. Previously, Bitdeer announced that Tether had purchased $100 million in shares through private placement financing, with an option to buy another $50 million later.

Tether CEO Paolo Ardoino has expressed interest in working closely with Bitdeer on “critical infrastructure projects.” The stablecoin issuer has also entered El Salvador’s Volcano Energy mining project, further demonstrating its commitment to the Bitcoin mining sector.

Linghui Kong, Chief Business Officer at Bitdeer, stated that Tether’s support will help accelerate the company’s growth and leadership position in sustainable and efficient Bitcoin mining.

This partnership represents a growing trend of cryptocurrency firms expanding beyond their core focus to explore opportunities in technology and energy sectors, potentially to diversify revenue streams during market downturns.