Northern Data AG, a prominent software enterprise based in Frankfurt, Germany, is on the brink of a significant transformation. The company is reportedly nearing a deal to sell its cryptocurrency mining operations. This strategic move comes in response to the recent surge in Bitcoin’s value, as reported by Bloomberg. The sale aims to leverage this rally and redirect the company’s focus towards burgeoning sectors.
Northern Data To Expand Its AI Business
Supported by Tether Holdings Ltd., Northern Data is poised to channel the proceeds from its crypto business sale into expanding its artificial intelligence (AI) services. This pivot is becoming increasingly common among miners, especially after Bitcoin’s April software update, which significantly reduced their primary revenue streams. Elliot Jordan, the Chief Financial Officer, highlighted the ongoing negotiations and the influx of proposals from potential buyers. “The process is well underway, with substantial offers already on the table,” Jordan stated during his presentation at the Deutsches Eigenkapitalforum.
Although Northern Data hasn’t set a formal valuation, pre-rally estimates ranged between $300 million and $500 million. “It’s an opportune moment to divest,” Jordan remarked to investors. Analyst Tim Wunderlich from Hauck Aufhaeuser Lampe Privatbank AG suggests that the company could achieve divestment proceeds close to $800 million, based on peer valuations of $100 million per exahash of operational power.
In a strategic move earlier this year, Northern Data announced a partnership with Penguin Infrastructure Holding to enhance its mining capacity by 28 megawatts. This initiative was designed to bolster their hash rate, which represents the total computing power sustaining the network. “Our operations contribute 7.9 exahash, just shy of 1% of Bitcoin’s total mining power,” Jordan noted.
The Transition From Miners To AI
In October, Northern Data, listed on the Frankfurt stock exchange, decided to divest its crypto-mining business, a move that aligns with its ambition to prioritize AI solutions. The Bitcoin halving in April had already reduced block rewards, pressuring miners financially. August 2024 is projected as a particularly challenging period for Bitcoin miners due to declining fees and a reduced hashrate. In light of these obstacles, several miners have transitioned towards AI support, which also demands substantial computing power.
This transition has proven financially beneficial for some. According to a June report by JPMorgan, Core Scientific’s deal to host 200 megawatts of GPUs for Coreweave led to a $4 billion surge in the market capitalization of approximately 14 Bitcoin mining companies.
Tether’s Commodities Liquidity Pool Could Hit $5 Billion
In related developments, Tether’s CEO Paolo Ardoino has projected significant growth in Tether Investment’s liquidity pool for raw material transactions. The pool could expand to between $3 billion and $5 billion by 2026. Tether Investments plans to lend capital to commodities brokers, earning interest on these short-term financings.
Ardoino emphasized this initiative as a strategic method to supply liquidity to a sector perpetually in need. He mentioned that Tether Investments is already collaborating with some of the largest commodities traders. These traders are interested in utilizing USDT for commodity trading, attracted by its transparency and transaction speed.
As Northern Data AG moves toward reshaping its business model, the sale of its crypto-mining sector represents a crucial step in embracing the future of AI technology. This strategic pivot not only positions the company for growth in a rapidly evolving market but also aligns with broader industry trends, showcasing a proactive approach to business innovation.
