Northern Data AG, a prominent software company based in Frankfurt, Germany, is on the brink of reaching a significant agreement to sell its cryptocurrency mining operations. This strategic move, highlighted in a recent Bloomberg report, is designed to leverage the surge in Bitcoin’s value experienced during November. The company is actively engaging in discussions with potential buyers to finalize this transaction.
Northern Data To Expand Its AI Business
Backed by Tether Holdings Ltd., Northern Data is strategically positioning itself to raise capital for expanding its artificial intelligence services. The shift in focus comes at a time when many cryptocurrency miners are exploring alternative business models following Bitcoin’s April software update, which halved their primary revenue source. CFO Elliot Jordan has confirmed that the company has engaged bankers and invited bids, with several offers currently under review.
During a presentation at the Deutsches Eigenkapitalforum, Jordan mentioned that while the company hasn’t set a valuation on its mining business, previous estimates ranged from $300 million to $500 million before the recent Bitcoin rally. “It’s a favorable period for selling this position,” he emphasized to investors. Analyst Tim Wunderlich from Hauck Aufhaeuser Lampe Privatbank AG suggests that with industry peers willing to pay $100 million per exahash operations per second, Northern Data could potentially secure divestment proceeds nearing $800 million in an optimal scenario.
In May, Northern Data announced a strategic partnership with Penguin Infrastructure Holding to provide 28 megawatts of mining capacity, aimed at increasing its hash rate—the total computing power supporting the Bitcoin network. Jordan highlighted, “We mine 7.9 exahash, which constitutes just under 1% of the overall Bitcoin mining capacity.”
The Transition From Miners To AI
In a pivotal decision made in October, the Frankfurt-listed company opted to sell its cryptocurrency mining division. This potential divestment is poised to enable Northern Data to concentrate on its rapidly expanding artificial intelligence (AI) solutions business.
Following the Bitcoin halving event in April, numerous miners faced reduced block rewards, prompting them to explore alternative revenue streams. August 2024 was a particularly challenging month for Bitcoin miners due to diminished fees and a lower hashrate. To navigate these obstacles, some miners have pivoted to supporting AI platforms that also necessitate substantial computing power.
The transition of Bitcoin miners to AI has notably enhanced their financial outcomes. As highlighted by JPMorgan in June, Core Scientific’s announcement of a deal to host 200 megawatts of GPUs for Coreweave alone resulted in a $4 billion increase in the combined market capitalization of approximately 14 Bitcoin mining companies.
Tether’s Commodities Liquidity Pool Could Hit $5 Billion
In recent developments, Tether’s CEO Paolo Ardoino has indicated that the size of Tether Investment’s liquidity pool, earmarked for financing raw material transactions, could expand to between $3 billion and $5 billion by 2026. Tether Investments aims to lend capital to commodities brokers, earning interest on the temporary financing arrangements.
Ardoino emphasized that this initiative serves to provide liquidity to a sector perpetually in need of financial resources. He highlighted that Tether Investments is already collaborating with some of the largest commodities traders in the industry, who have expressed keen interest in using USDT for commodity trading due to its transparency and transaction speed.
