Profit of $4.5 billion in the first quarter: Tether moves into Bitcoin mining, AI, and education
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Profit of $4.5 billion in the first quarter: Tether moves into Bitcoin mining, AI, and education
Tether's stablecoin USDT market cap surged to $111 billion, triple that of its closest competitor, Circle's USDC
Navigating Web3 tides with focused insightsBy Nina Bambysheva, Forbes
Translated by Luffy, Foresight News
While much of the crypto world collapsed during the period when FTX and other industry giants fell, Tether stood apart, thriving amid the storm.
Tether’s stablecoin USDT surged to a market capitalization of $111 billion—three times that of its closest competitor, USDC, issued by Boston-based Circle. Tether enjoys an enviable business model because its funding source is essentially free. Backed largely by U.S. Treasuries, which currently yield high interest rates, Tether does not pay interest to customers who deposit fiat currency in exchange for USDT—unlike traditional banks.
In the first quarter of 2024 alone, Tether reported unaudited “financial performance” of $4.5 billion in revenue and $11.4 billion in net assets. In 2023, the company reported a net profit of $6.2 billion, making it likely the most profitable company in crypto today. By comparison, Coinbase—the largest U.S. cryptocurrency exchange—generated $3.1 billion in revenue and $95 million in profit in 2023, with a net income of $1.2 billion in Q1 2024, driven primarily by rising crypto prices. About 20% of Coinbase’s 2023 profits came from interest earned on reserves backing the USDC stablecoin through its partnership with Circle.
Now flush with cash, Tether is looking beyond stablecoins for growth. Last month, the British Virgin Islands-based company announced a strategic restructuring, launching three new divisions alongside its core stablecoin business: Bitcoin mining, artificial intelligence, and education.
Paolo Ardoino, CEO of Tether
“The crypto idea of removing intermediaries can be applied to many other fields,” says Paolo Ardoino, Tether’s newly appointed CEO, who has served as the company’s CTO and spokesperson since 2017.
Tether’s expansion isn’t just cautious diversification—it’s philosophical. “We feel that 90%, or even more, of technology is built for best-case scenarios, but nobody builds tech for worst-case scenarios,” says the 40-year-old Ardoino. “If disaster strikes—I’m not saying it will, but anything could happen—and we’re unprepared, then we’re vulnerable.”
Crypto historians recall that Bitcoin was created by Satoshi Nakamoto in response to the 2008 financial crisis, amid widespread skepticism about the stability and reliability of the existing global financial system. Ardoino believes Tether will play a key role in building what he calls sovereign technologies that empower individuals.
“Having resilient money is good,” Ardoino says, “but if you only have resilient money while everything else remains centralized, it can be destroyed quickly. One of our mottos is ‘Build for the apocalypse.’”
Paolo Ardoino grew up on a family farm in northern Italy. He began programming at age eight and later studied computer science and mathematics at the University of Genoa. After graduating in 2008, Ardoino became a researcher on military projects at Selex Communications, an electronics and information technology firm, focusing on highly available resilient networks and encryption technologies.
Seeking opportunities outside Italy, he moved to London around 2013 and soon founded Fincluster, a startup that built cloud-based financial applications for advisors, fund managers, and institutions in London, Milan, and Lugano. In October 2014, one of his clients introduced him to Giancarlo Devasini, CFO of Tether and its sister crypto exchange Bitfinex. Devasini invited Ardoino to help scale the Bitfinex platform, which was rapidly gaining popularity.
Ardoino was quickly named tech lead for both companies. With Devasini and CEO Jean-Louis van der Velde operating discreetly, Ardoino became Tether’s public face. According to Forbes’ billionaire rankings, the trio—along with general counsel Stuart Hoegner—later became billionaires.
In December last year, Ardoino officially took the helm at Tether while retaining his role as CTO of Bitfinex. He also oversees strategy for Holepunch, a technology platform enabling developers to create serverless applications, launched by Tether, Bitfinex, and infrastructure platform Hypercore.
Ardoino says Tether’s ownership structure remains unchanged. CFO Devasini is still the largest shareholder, and former CEO van der Velde remains involved as an advisor. But that hasn’t stopped Ardoino from charting a new course for Tether. Last month, the company announced a reorganization into four divisions to manage its expanding focus:
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Financial division: manages USDT and oversees the upcoming digital asset tokenization platform;
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Data division: makes strategic investments in emerging technologies including AI and peer-to-peer platforms;
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Power division: focuses on Bitcoin mining and energy-related ventures;
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Education division: supports educational and leadership programs.
Tether has already made progress across each area. Last year, the stablecoin giant participated in a $1 billion investment in El Salvador’s “Volcano Energy” Bitcoin mining operation, powered by solar and wind energy. Tether also established its own Bitcoin mining facility in Uruguay. In September 2023, Tether revealed it had spent $420 million on behalf of publicly listed German Bitcoin miner Northern Data to purchase 10,000 Nvidia H100 graphics processing units (GPUs)—typically used by AI firms processing large datasets. In return, Tether received a 20% stake in the company, which plans to lease these chips to AI startups. Another novel investment came in April, when Tether acquired a majority stake in Blackrock Neurotech, a Salt Lake City-based biotech firm manufacturing brain-implant chips designed to allow people with neurological disorders or paralysis to “eat, drink, operate robotic arms, and send emails using their thoughts.”
According to Ardoino, Tether doubled its staff last year to around 100 employees, and he personally interviews every candidate. “I don’t want yes-men,” Ardoino says. “I want people to tell me what they think about Tether—what we’re doing right and where we’re wrong.”
In Bitcoin mining, Ardoino aims to capture 5% of the market share, placing Tether among the top global miners. “If you believe Bitcoin is the ultimate form of money, built for doomsday, then you wouldn’t want most Bitcoin mining concentrated in one country. The way to prevent that is to invest across different regions,” he explains. “We started in South America and plan to expand into various regions globally to ensure Bitcoin mining continues to decentralize.”
“When it comes to competing in Bitcoin mining, it all boils down to how much capital you can deploy. They’ve already committed roughly $500 million. With that kind of funding, you can go very far,” says Kevin Dede, analyst at HC Wainwright. Adam Sullivan, CEO of publicly traded Core Scientific, adds: “They’re now the biggest investor in Bitcoin mining. It makes perfect sense for them—it’s a real driver behind their business.” Sullivan refers to how Tether’s substantial holdings in digital assets mean rising Bitcoin prices boost its profits; further gains from mining would amplify this effect.
However, while Tether has made significant strides in Bitcoin mining, entering the AI space presents greater challenges. Beyond deals with companies like Northern Data, Tether is pursuing internal development—building large-scale models and integrating AI capabilities into existing products. Job postings on Tether’s website list positions such as AI engineer and AI R&D director. “I believe AI can play a bigger role, free from the political biases of the current elite few running the world’s largest AI projects,” Ardoino says, referring to dominant players like Microsoft, OpenAI, and Google. “We believe AI should be disintermediated, just like money should be.”
Rob Toews, partner at Radical Ventures, is skeptical about Tether’s move into AI. “Acquiring GPUs and leasing them to AI firms is an easier entry strategy, but I struggle to see Tether becoming a credible player in building multimodal AI models.”
Tether’s education arm will offer courses and workshops covering blockchain technology, AI, coding, and design. The company has already partnered with Georgia's Digital Industry Academy and Thailand’s largest local exchange, Bitkub, on multiple initiatives. “Education is foundational to this journey and key to fostering economic prosperity and sustainable development,” Ardoino says.
Given crypto’s turbulent history and Tether’s lack of audited financial statements by certified public accountants, concerns remain about the source of funding for its new investments. According to Tether’s financial attestations, most of its $4.52 billion in Q1 profits came from gains on its Bitcoin and gold positions. Ardoino insists Tether’s investments are funded by profits, not customer reserves.
Austin Campbell, adjunct professor at Columbia Business School and advisor to blockchain firms, warns: “If people think they’re starting to use customer reserves to fund these investments, Tether could collapse quickly. I’ve always said the issue with Tether isn’t how much they hold now—but how much they might hold in the future, because they’re unrestricted.”
Campbell also cautions that Tether’s dominance in stablecoins is far from guaranteed long-term: “As stablecoin regulations emerge and oversight formalizes, Tether will either have to comply locally or exit those jurisdictions.”
Tether’s lead is already being challenged. While USDT still leads the stablecoin market with a 69% share, according to DefiLlama, it lags behind in transaction volume. Analysis by payments giant Visa and enterprise blockchain data platform Allium Labs shows that Circle’s USDC recorded 178.6 million transactions in April 2024, surpassing USDT’s 173.9 million.
Additionally, a recent report by S&P Global Ratings highlighted a revised bipartisan stablecoin bill introduced in April by Senators R-Wyo and D-N.Y., which would cap stablecoin issuance at $10 billion for entities without banking licenses—potentially encouraging competition from traditional banks.
“We believe all these investments are critical for Tether… We believe they can change lives in emerging markets and developing countries. We aim to be leaders in human evolution,” says Ardoino.
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